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What You Don?t Know Can?t Help You: Pension Knowledge and Retirement Decision Making

Author

Listed:
  • Ann Huff Stevens
  • Sewin Chan

    (Department of Economics, University of California Davis)

Abstract

This paper provides an answer to an important empirical puzzle in the retirementliterature: while most people know little about their own pension plans, retirement behavior isstrongly affected by pension incentives. We combine administrative and self-reported pensiondata to measure the retirement response to actual and perceived financial incentives. Whilevirtually all recent empirical work has relied on administrative- or employer-reported data, wedocument an important role for self-reported pension data in determining retirement behavior.Well-informed individuals are five times more responsive to pension incentives than the average.In contrast, ill-informed individuals respond to their own misperceptions of the incentives ratherthan being unresponsive to any measured incentives.

Suggested Citation

  • Ann Huff Stevens & Sewin Chan, 2005. "What You Don?t Know Can?t Help You: Pension Knowledge and Retirement Decision Making," Working Papers 20, University of California, Davis, Department of Economics.
    • Handle: RePEc:cda:wpaper:20
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    File URL: https://repec.dss.ucdavis.edu/files/aCkmHZ2WyZ3p6W2ahFLF7vdh/05-18.pdf
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    References listed on IDEAS

    as
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    5. James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2001. "Defined Contribution Pensions: Plan Rules, Participant Decisions, and the Path of Least Resistance," NBER Working Papers 8655, National Bureau of Economic Research, Inc.
    6. Chan, Sewin & Stevens, Ann Huff, 2004. "Do changes in pension incentives affect retirement? A longitudinal study of subjective retirement expectations," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1307-1333, July.
    7. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
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    Cited by:

    1. Alan L. Gustman & Thomas Steinmeier & Nahid Tabatabai, 2007. "Imperfect Knowledge of Pension Plan Type," NBER Working Papers 13379, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    pension plans; retirement behavior;

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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