The DOI matches its Crossref record; 8 of the 8 references it cites were found in a registry or an index.
The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior
Abstract
This paper analyzes the impact of automatic enrollment on 401(k) savings behavior. We have two key findings. First, 401(k) participation is significantly higher under automatic enrollment. Second, a substantial fraction of 401(k) participants hired under automatic enrollment retain both the default contribution rate and fund allocation even though few employees hired before automatic enrollment picked this particular outcome. This “default” behavior appears to result from participant inertia and from employee perceptions of the default as investment advice. These findings have implications for the design of 401(k) savings plans as well as for any type of Social Security reform that includes personal accounts over which individuals have control. They also shed light more generally on the importance of both economic and noneconomic (behavioral) factors in the determination of individual savings behavior.
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Cites
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Samuelson, W., & Zeckhauser, R. (1988) · Journal of Risk and Uncertainty · doi:10.1007/bf00055564 · Cited by 5,897
Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias
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Cited by
Maps of Bounded Rationality: Psychology for Behavioral Economics
Kahneman, D. (2003) · American Economic Review · doi:10.1257/000282803322655392 · Cited by 5,377
The Economic Importance of Financial Literacy: Theory and Evidence
Lusardi, A., & Mitchell, O. S. (2014) · Journal of Economic Literature · doi:10.1257/jel.52.1.5 · Cited by 4,698
Lerner, J. S., Li, Y., Valdesolo, P., & Kassam, K. S. (2015) · Annual Review of Psychology · doi:10.1146/annurev-psych-010213-115043 · Cited by 2,913
Psychology and Economics: Evidence from the Field
DellaVigna, S. (2009) · Journal of Economic Literature · doi:10.1257/jel.47.2.315 · Cited by 2,365
Financial Literacy, Financial Education, and Downstream Financial Behaviors
Fernandes, D., Lynch, J. G., & Netemeyer, R. G. (2014) · Management Science · doi:10.1287/mnsc.2013.1849 · Cited by 2,152
Metadata
- Authors
- Madrian, B. C., & Shea, D. F.
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 2001-11-01
- Volume
- 116
- Issue
- 4
- Pages
- 1149-1187
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W3124550172
- Cited by
- 2,727
- References
- 8
- FWCI
- 118.01
- Type
- journal article
- Language
- en
- Open access
- closed
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- Madrian, B. C., & Shea, D. F. (2001). The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior. The Quarterly Journal of Economics. https://doi.org/10.1162/003355301753265543
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
