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The Role of Information and Social Interactions in Retirement Plan Decisions: Evidence from a Randomized Experiment

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  • Esther Duflo
  • Emmanuel Saez

Abstract

This paper analyzes a randomized experiment to shed light on the role of information and social interactions in employees' decisions to enroll in a Tax Deferred Account (TDA) retirement plan within a large university. The experiment encouraged a random sample of employees in a subset of departments to attend a benefits information fair organized by the university, by promising a monetary reward for attendance. The experiment more than tripled the attendance rate of these treated individuals (relative to controls), and doubled that of untreated individuals within departments where some individuals were treated. TDA enrollment 5 and 11 months after the fair was significantly higher in departments where some individuals were treated than in departments where nobody was treated. However, the effect on TDA enrollment is almost as large for individuals in treated departments who did not receive the encouragement as for those who did. We provide three interpretations, differential treatment effects, social network effects, and motivational reward effects, to account for these results.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8885.

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Date of creation: Apr 2002
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Publication status: published as Duflo, Esther and Emmanuel Saez. "The Role Of Information And Social Interactions In Retirement Plan Decisions: Evidence From A Randomized Experiment," Quarterly Journal of Economics, 2003, v118(3,Aug), 815-842.
Handle: RePEc:nbr:nberwo:8885

Note: AG LS PE
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  1. Brigitte C. Madrian & Dennis F. Shea, 2001. "THE POWER OF SUGGESTION: INERTIA IN 401(k) PARTICIPATION AND SAVINGS BEHAVIOR," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1149-1187, November.
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