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Nudging Retirement Savings: A Field Experiment on Supplemental Plans

Listed author(s):
  • Robert L. Clark
  • Robert G. Hammond
  • Melinda Sandler Morrill
  • Christelle Khalaf

Although supplemental saving plans can be an important part of an individual's financial security in retirement, contribution rates remain low, particularly among those with lower salaries and less education. We report findings from a field experiment that distributed an informational nudge containing information on key aspects of the employer-provided supplemental saving plans of older public employees in North Carolina. Among workers participating in a supplemental plan, individuals who received an informational nudge increased their contributions in the months following the intervention relative to the control group. Moreover, those that received the nudge reported in a subsequent survey that they were more likely to have developed a retirement plan and report more confidence in their retirement preparedness. In contrast, individuals who were not enrolled in a retirement saving plan were not moved to begin contributing to a supplemental plan.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 23679.

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Date of creation: Aug 2017
Handle: RePEc:nbr:nberwo:23679
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  1. Choi, James J. & Laibson, David & Madrian, Brigitte C., 2004. "Plan Design and 401(K) Savings Outcomes," National Tax Journal, National Tax Association, vol. 57(2), pages 275-298, June.
  2. Richard H. Thaler & Shlomo Benartzi, 2004. "Save More Tomorrow (TM): Using Behavioral Economics to Increase Employee Saving," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 164-187, February.
  3. Robert L. Clark & Jennifer A. Maki & Melinda Sandler Morrill, 2014. "Can Simple Informational Nudges Increase Employee Participation in a 401(k) Plan?," Southern Economic Journal, Southern Economic Association, vol. 80(3), pages 677-701, January.
  4. Samuel Marshall & Kathleen McGarry & Jonathan S. Skinner, 2011. "The Risk of Out-of-Pocket Health Care Expenditure at the End of Life," NBER Chapters,in: Explorations in the Economics of Aging, pages 101-128 National Bureau of Economic Research, Inc.
  5. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April.
  6. James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2003. "Optimal Defaults," American Economic Review, American Economic Association, vol. 93(2), pages 180-185, May.
  7. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
  8. S. Dellavigna., 2011. "Psychology and Economics: Evidence from the Field," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
  9. Brigitte C. Madrian & Dennis F. Shea, 2001. "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1149-1187.
  10. repec:aea:aecrev:v:107:y:2017:i:5:p:456-61 is not listed on IDEAS
  11. Robert L. Clark & Robert G. Hammond & Christelle Khalaf & Melinda Sandler Morrill, 2017. "Planning for Retirement? The Importance of Time Preferences," NBER Working Papers 23501, National Bureau of Economic Research, Inc.
  12. John Karl Scholz & Ananth Seshadri & Surachai Khitatrakun, 2006. "Are Americans Saving "Optimally" for Retirement?," Journal of Political Economy, University of Chicago Press, vol. 114(4), pages 607-643, August.
  13. Shlomo Benartzi & Richard Thaler, 2004. "Save more tomorrow: Using behavioral economics to increase employee saving," Natural Field Experiments 00337, The Field Experiments Website.
  14. Clark, Robert L. & Hanson, Emma & Morrill, Melinda Sandler & Pathak, Aditi, 2016. "Supplemental plan offerings and retirement saving choices: an analysis of North Carolina school districts," Journal of Pension Economics and Finance, Cambridge University Press, vol. 15(03), pages 333-355, July.
  15. B. Douglas Bernheim & Andrey Fradkin & Igor Popov, 2015. "The Welfare Economics of Default Options in 401(k) Plans," American Economic Review, American Economic Association, vol. 105(9), pages 2798-2837, September.
  16. Thaler, Richard H, 1994. "Psychology and Savings Policies," American Economic Review, American Economic Association, vol. 84(2), pages 186-192, May.
  17. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
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