Simplification and Saving.
The daunting complexity of important financial decisions can lead to procrastination. We evaluate a low-cost intervention that substantially simplifies the retirement savings plan participation decision. Individuals received an opportunity to enroll in a retirement savings plan at a pre-selected contribution rate and asset allocation, allowing them to collapse a multidimensional problem into a binary choice between the status quo and the pre-selected alternative. The intervention increases plan enrollment rates by 10 to 20 percentage points. We find that a similar intervention can be used to increase contribution rates among employees who are already participating in a savings plan.
Stanford University and NBER.
John
J
Beshears
Yale University and NBER.
James J
JJ
Choi
Harvard University and NBER.
David
D
Laibson
Harvard University and NBER.
Brigitte C
BC
Madrian