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Small Cues Change Savings Choices

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

In randomized field experiments, we embedded one- to two-sentence anchoring, goal-setting, or savings threshold cues in emails to employees about their 401(k) savings plan. We find that anchors increase or decrease 401(k) contribution rates by up to 1.9% of income. A high savings goal example raises contribution rates by up to 2.2% of income. Highlighting a higher savings threshold in the match incentive structure raises contributions by up to 1.5% of income relative to highlighting the lower threshold. Highlighting the maximum possible contribution rate raises contribution rates by up to 2.9% of income among low savers.

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File URL: http://www.nber.org/papers/w17843.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17843.

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Date of creation: Feb 2012
Date of revision:
Handle: RePEc:nbr:nberwo:17843
Note: AG AP PE
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  1. Mitchell, Olivia S. & Utkus, Stephen P. (ed.), 2004. "Pension Design and Structure: New Lessons from Behavioral Finance," OUP Catalogue, Oxford University Press, number 9780199273393.
  2. Beshears, John & Choi, James J. & Laibson, David & Madrian, Brigitte C., 2013. "Simplification and saving," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 130-145.
  3. Gabriel D. Carroll & James J. Choi & David Laibson & Brigitte Madrian & Andrew Metrick, 2005. "Optimal Defaults and Active Decisions," NBER Working Papers 11074, National Bureau of Economic Research, Inc.
  4. Wise, David A. (ed.), 2009. "The Economics of Aging," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226903224.
  5. Green, Donald & Jacowitz, Karen E. & Kahneman, Daniel & McFadden, Daniel, 1998. "Referendum contingent valuation, anchoring, and willingness to pay for public goods," Resource and Energy Economics, Elsevier, vol. 20(2), pages 85-116, June.
  6. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
  7. Wise, David A. (ed.), 2009. "Developments in the Economics of Aging," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226903354.
  8. Ximena Cadena & Antoinette Schoar, 2011. "Remembering to Pay? Reminders vs. Financial Incentives for Loan Payments," NBER Working Papers 17020, National Bureau of Economic Research, Inc.
  9. Alan Beggs & Kathryn Graddy, 2009. "Anchoring Effects: Evidence from Art Auctions," American Economic Review, American Economic Association, vol. 99(3), pages 1027-39, June.
  10. Richard Thaler & Shlomo Benartzi, 2004. "Save more tomorrow: Using behavioral economics to increase employee saving," Natural Field Experiments 00337, The Field Experiments Website.
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