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Small cues change savings choices

Author

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  • Choi, James J.
  • Haisley, Emily
  • Kurkoski, Jennifer
  • Massey, Cade

Abstract

We present evidence from randomized field experiments that 401(k) savings choices are significantly affected by one- to two-sentence anchoring, goal-setting, or savings threshold cues embedded in emails sent to employees about their 401(k) plan. Even though these cues contain little to no marginal information, cues that make high savings rates salient increased 401(k) contribution rates by up to 2.9% of income in a pay period, and cues that make low savings rates salient decreased 401(k) contribution rates by up to 1.4% of income in a pay period. Cue effects persist between two months and a year after the email.

Suggested Citation

  • Choi, James J. & Haisley, Emily & Kurkoski, Jennifer & Massey, Cade, 2017. "Small cues change savings choices," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 378-395.
  • Handle: RePEc:eee:jeborg:v:142:y:2017:i:c:p:378-395
    DOI: 10.1016/j.jebo.2017.08.010
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    More about this item

    Keywords

    Nudge; Cues; Anchoring; Goals; 401(k); Retirement savings;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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