The Effect of Providing Peer Information on Retirement Savings Decisions
We conducted a field experiment in a 401(k) plan to measure the effect of disseminating information about peer behavior on savings. Low-saving employees received simplified plan enrollment or contribution increase forms. A randomized subset of forms stated the fraction of age-matched coworkers participating in the plan or age-matched participants contributing at least 6% of pay to the plan. We document an oppositional reaction: the presence of peer information decreased the savings of non-participants who were ineligible for 401(k) automatic enrollment, and higher observed peer savings rates also decreased savings. Discouragement from upward social comparisons seems to drive this reaction.
An data appendix is available at http://www.nber.org/data-appendix/w17345/
This paper was revised on August 7, 2014
Document Object Identifier (DOI): 10.3386/w17345
Journal of Finance, forthcoming
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