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The Effect of Providing Peer Information on Retirement Savings Decisions

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  • John Beshears
  • James J. Choi
  • David Laibson
  • Brigitte C. Madrian
  • Katherine L. Milkman

Abstract

We conducted a field experiment in a 401(k) plan to measure the effect of disseminating information about peer behavior on savings. Low-saving employees received simplified plan enrollment or contribution increase forms. A randomized subset of forms stated the fraction of age-matched coworkers participating in the plan or age-matched participants contributing at least 6% of pay to the plan. We document an oppositional reaction: the presence of peer information decreased the savings of non-participants who were ineligible for 401(k) automatic enrollment, and higher observed peer savings rates also decreased savings. Discouragement from upward social comparisons seems to drive this reaction.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17345.

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Date of creation: Aug 2011
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Publication status: published as Journal of Finance, forthcoming
Handle: RePEc:nbr:nberwo:17345

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Cited by:
  1. Dean Karlan & Aishwarya Lakshmi Ratan & Jonathan Zinman, 2013. "Savings by and for the Poor: A Research Review and Agenda," Working Papers 1027, Economic Growth Center, Yale University.
  2. Dean Karlan, Aishwarya Lakshmi Ratan, Jonathan Zinman, 2013. "Savings by and for the Poor: A Research Review and Agenda-Working Paper 346," Working Papers 346, Center for Global Development.
  3. Kast, Felipe & Meier, Stephan & Pomeranz, Dina, 2012. "Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device," IZA Discussion Papers 6311, Institute for the Study of Labor (IZA).
  4. Ariel BenYishay & A. Mushfiq Mobarak, 2014. "Social Learning and Communication," NBER Working Papers 20139, National Bureau of Economic Research, Inc.
  5. Miller, Margaret & Reichelstein, Julia & Salas, Christian & Zia, Bilal, 2014. "Can you help someone become financially capable ? a meta-analysis of the literature," Policy Research Working Paper Series 6745, The World Bank.
  6. Leonardo Bursztyn & Florian Ederer & Bruno Ferman & Noam Yuchtman, 2012. "Understanding Peer Effects in Financial Decisions: Evidence from a Field Experiment," NBER Working Papers 18241, National Bureau of Economic Research, Inc.
  7. Paul Dolan & Robert Metcalfe, 2013. "Neighbors, Knowledge, and Nuggets: Two Natural Field Experiments on the Role of Incentives on Energy Conservation," CEP Discussion Papers dp1222, Centre for Economic Performance, LSE.
  8. Cai, Jing & de Janvry, Alain & Sadoulet, Elisabeth, 2013. "Social Networks and the Decision to Insure," MPRA Paper 46861, University Library of Munich, Germany.
  9. Ariel BenYishay & A. Mushfiq Mobarak, 2013. "Communicating with Farmers through Social Networks," Working Papers 1030, Economic Growth Center, Yale University.
  10. 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.
  11. Allcott, Hunt, 2011. "Social norms and energy conservation," Journal of Public Economics, Elsevier, vol. 95(9), pages 1082-1095.

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