Responding to the Downturn: How Does Information Change Behavior?
AbstractMany workers nearing retirement experienced a dramatic decrease in their retirement assets due to the stock market downturn. In order to maintain their expected standard of living in retirement, workers will need to work longer, save more, or do both. To measure the response of older workers to this downturn, the Center for Retirement Research at Boston College (CRR) fielded the CRR 2009 Retirement Survey on a nationally representative sample of 45-59-year-old labor force participants with relatively high pre-downturn assets.1 This brief is the third of four based on the CRR 2009 Retirement Survey. The first brief described the Survey and highlighted its unique financial, employment, and behavioral factors.2 The second brief explored the relationship between these factors and worker responses to the downturn.3 This brief examines how providing simple information about the trade-offs involved in responding to the downturn impacts the responses. This brief is organized as follows. The first section provides a brief overview of the initial responses – work more, save more, both, or neither. The second section describes how these responses changed once the trade-off between working longer, saving more, and consuming less in retirement was made explicit. The third section then explains the relationship between the initial responses and the more informed responses. The fourth section identifies the characteristics associated with respondents who changed their response. The final section concludes that providing simple information on trade-offs appears to have a surprisingly large impact on changing responses.
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Bibliographic InfoPaper provided by Center for Retirement Research in its series Issues in Brief with number ib2010-20.
Length: 11 pages
Date of creation: Dec 2010
Date of revision: Dec 2010
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This paper has been announced in the following NEP Reports:
- NEP-AGE-2011-02-05 (Economics of Ageing)
- NEP-ALL-2011-02-05 (All new papers)
- NEP-LAB-2011-02-05 (Labour Economics)
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