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What You Don't Know Can't Help You: Pension Knowledge and Retirement Decision-Making

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  • Sewin Chan

    (Wagner Graduate School of Public Service, New York University)

  • Ann Huff Stevens

    (Department of Economics, University of California, Davis)

Abstract

This paper provides an answer to an important empirical puzzle in the retirement literature: while most people know little about their own pension plans, retirement behavior is strongly affected by pension incentives. We combine administrative and self-reported pension data to measure the retirement response to actual and perceived financial incentives and document an important role for self-reported pension data in determining retirement behavior. Well-informed individuals are far more responsive to pension incentives than the average individual. Ill-informed individuals seem to respond systematically to their own misperceptions of pension incentives. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Sewin Chan & Ann Huff Stevens, 2008. "What You Don't Know Can't Help You: Pension Knowledge and Retirement Decision-Making," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 253-266, May.
    • Handle: RePEc:tpr:restat:v:90:y:2008:i:2:p:253-266
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    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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