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Efficiency in Household Decision-Making: Evidence from the Retirement Savings of US Couples

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  • Taha Choukhmane
  • Lucas Goodman
  • Cormac O'Dea

Abstract

We study how couples allocate retirement-saving contributions across each spouse's account. In a new dataset covering over a million US individuals, we find retirement contributions are not allocated to the account with the highest employer match rate. This lack of coordination—which goes against the assumptions of most models of household decision-making—is common, costly, persistent over time, and cannot be explained by inertia, auto-enrollment, or simple heuristics. Complementing the administrative evidence with an online survey, we find that inefficient allocations reflect both financial mistakes as well as deliberate choices, especially when trust and commitment inside the households are weak.

Suggested Citation

  • Taha Choukhmane & Lucas Goodman & Cormac O'Dea, 2025. "Efficiency in Household Decision-Making: Evidence from the Retirement Savings of US Couples," American Economic Review, American Economic Association, vol. 115(5), pages 1485-1519, May.
    • Handle: RePEc:aea:aecrev:v:115:y:2025:i:5:p:1485-1519
    DOI: 10.1257/aer.20230524
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    Cited by:

    1. Derby, Elena & Mackie, Kathleen & Mortenson, Jacob, 2023. "Worker and spousal responses to automatic enrollment," Journal of Public Economics, Elsevier, vol. 223(C).
    2. Belloc, Ignacio & Molina, José Alberto & Velilla, Jorge, 2023. "Effects of Lottery Wins on Household Labor Supply," IZA Discussion Papers 16327, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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