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Would People Behave Differently If They Better Understood Social Security? Evidence From a Field Experiment

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  • Jeffrey B. Liebman
  • Erzo F.P. Luttmer

Abstract

This paper presents the results of a field experiment in which a sample of older workers was randomized between a treatment group that was given information about key Social Security provisions and a control group that was not. The experiment was designed to examine whether it is possible to affect individual behavior using a relatively inexpensive informational intervention about the provisions of a public program and to explore the mechanisms underlying the behavior change. We find that our relatively mild intervention (sending an informational brochure and an invitation to a web-tutorial) increased labor force participation one year later by 4 percentage points relative to the control group mean of 74 percent and that this effect is driven by a 7.2 percentage point increase among female subjects. In addition to affecting actual labor supply behavior, the information intervention increased survey measures of the perceived returns to working longer, especially among female respondents.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17287.

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Date of creation: Aug 2011
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Handle: RePEc:nbr:nberwo:17287

Note: AG LS PE
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  1. Justine S. Hastings & Lydia Tejeda-Ashton, 2008. "Financial Literacy, Information, and Demand Elasticity: Survey and Experimental Evidence from Mexico," NBER Working Papers 14538, National Bureau of Economic Research, Inc.
  2. Zvi Eckstein & Osnat Lifshitz, 2011. "Dynamic Female Labor Supply," Econometrica, Econometric Society, Econometric Society, vol. 79(6), pages 1675-1726, November.
  3. Annamaria Lusardi & Olivia S. Mitchell, 2009. "How Ordinary Consumers Make Complex Economic Decisions: Financial Literacy and Retirement Readiness," NBER Working Papers 15350, National Bureau of Economic Research, Inc.
  4. Mitchell, Olivia S, 1988. "Worker Knowledge of Pension Provisions," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 6(1), pages 21-39, January.
  5. John Beshears & James Choi & David Laibson & Brigitte Madrian, 2008. "How are Preferences Revealed?," Yale School of Management Working Papers, Yale School of Management amz2466, Yale School of Management.
  6. Liebman, Jeffrey B. & Luttmer, Erzo F.P. & Seif, David G., 2009. "Labor Supply Responses to Marginal Social Security Benefits: Evidence from Discontinuities," Scholarly Articles 4481678, Harvard Kennedy School of Government.
  7. B. Douglas Bernheim & Antonio Rangel, 2008. "Beyond Revealed Preference: Choice Theoretic Foundations for Behavioral Welfare Economics," NBER Working Papers 13737, National Bureau of Economic Research, Inc.
  8. Jeffrey R. Kling & Sendhil Mullainathan & Eldar Shafir & Lee C. Vermeulen & Marian V. Wrobel, 2012. "Comparison Friction: Experimental Evidence from Medicare Drug Plans," Mathematica Policy Research Reports, Mathematica Policy Research 7375, Mathematica Policy Research.
  9. Jeffrey R. Brown & Arie Kapteyn & Olivia S. Mitchell, 2011. "Framing Effects and Expected Social Security Claiming Behavior," Working Papers, RAND Corporation Publications Department 854, RAND Corporation Publications Department.
  10. Raj Chetty & Adam Looney & Kory Kroft, 2007. "Salience and Taxation: Theory and Evidence," NBER Working Papers 13330, National Bureau of Economic Research, Inc.
  11. Raj Chetty & Emmanuel Saez, 2009. "Teaching the Tax Code: Earnings Responses to an Experiment with EITC Recipients," NBER Working Papers 14836, National Bureau of Economic Research, Inc.
  12. Hugo Benítez-Silva & Berna Demiralp & Zhen Liu, 2009. "Social Security Literacy and Retirement Well-Being," Working Papers, University of Michigan, Michigan Retirement Research Center wp210, University of Michigan, Michigan Retirement Research Center.
  13. Daron Acemoglu & Amy Finkelstein, 2008. "Input and Technology Choices in Regulated Industries: Evidence from the Health Care Sector," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 116(5), pages 837-880, October.
  14. Mastrobuoni, Giovanni, 2011. "The role of information for retirement behavior: Evidence based on the stepwise introduction of the Social Security Statement," Journal of Public Economics, Elsevier, Elsevier, vol. 95(7), pages 913-925.
  15. Anderson, Michael L., 2008. "Multiple Inference and Gender Differences in the Effects of Early Intervention: A Reevaluation of the Abecedarian, Perry Preschool, and Early Training Projects," Journal of the American Statistical Association, American Statistical Association, American Statistical Association, vol. 103(484), pages 1481-1495.
  16. Annamaria Lusardi & Olivia S Mitchelli, 2007. "Financial Literacy and Retirement Preparedness: Evidence and Implications for Financial Education," Business Economics, Palgrave Macmillan, vol. 42(1), pages 35-44, January.
  17. Adeline Delavande & Susann Rohwedder, 2008. "Eliciting Subjective Expectations in Internet Surveys," Working Papers, RAND Corporation Publications Department 589, RAND Corporation Publications Department.
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Citations

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Cited by:
  1. Jeffrey B. Liebman & Erzo F. P. Luttmer, 2012. "The Perception of Social Security Incentives for Labor Supply and Retirement: The Median Voter Knows More Than You’d Think," Tax Policy and the Economy, University of Chicago Press, vol. 26(1), pages 1 - 42.
  2. Robert L. Clark & Jennifer A. Maki & Melinda Sandler Morrill, 2013. "Can Simple Informational Nudges Increase Employee Participation in a 401(k) Plan?," NBER Working Papers 19591, National Bureau of Economic Research, Inc.
  3. Aviva Aron-Dine & Liran Einav & Amy Finkelstein & Mark R. Cullen, 2012. "Moral Hazard in Health Insurance: How Important Is Forward Looking Behavior?," NBER Working Papers 17802, National Bureau of Economic Research, Inc.
  4. Alexander M. Gelber & Damon Jones & Daniel W. Sacks, 2013. "Earnings Adjustment Frictions: Evidence from the Social Security Earnings Test," NBER Working Papers 19491, National Bureau of Economic Research, Inc.
  5. John B. Shoven & Sita Nataraj Slavov, 2013. "Recent Changes in the Gains from Delaying Social Security," NBER Working Papers 19370, National Bureau of Economic Research, Inc.
  6. Michael Hallsworth & John List & Robert Metcalfe & Ivo Vlaev, 2014. "The behavioralist as tax collector: Using natural field experiments to enhance tax compliance," Natural Field Experiments, The Field Experiments Website 00391, The Field Experiments Website.
  7. Junya Hamaaki, 2013. "The Pension System and Household Consumption and Saving Behavior," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, Policy Research Institute, Ministry of Finance Japan, vol. 9(4), pages 687-716, September.
  8. Alexander M. Gelber & Damon Jones & Daniel W. Sacks, 2013. "Earnings Adjustment Frictions: Evidence From Social Security Earnings Test," Working Papers 13-50, Center for Economic Studies, U.S. Census Bureau.
  9. Aviva Aron-Dine & Liran Einav & Amy Finkelstein & Mark Cullen, 2012. "Moral hazard in health insurance: How important is forward looking behavior?," Discussion Papers, Stanford Institute for Economic Policy Research 11-007, Stanford Institute for Economic Policy Research.

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