Small Cues Change Savings Choices
52 Pages Posted: 19 Mar 2012
Date Written: January 27, 2012
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 1.4% 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.
Keywords: anchoring, goal setting, retirement savings, 401(k), household finance
JEL Classification: C93, D91, E21
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