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Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan

Joshua Blumenstock, Michael Callen, Tarek Ghani

NBER Working Paper No. 23590
Issued in July 2017, Revised in April 2018
NBER Program(s):Development Economics

We report on an experiment examining why default options impact behavior. By randomly assigning employees to different varieties of a salary-linked savings account, we find that default enrollment increases participation by 40 percentage points—an effect equivalent to providing a 50% matching incentive. We then use a series of experimental interventions to differentiate between explanations for the default effect, which we conclude is driven largely by present-biased preferences and the cognitive cost of thinking through different savings scenarios. Default assignment also changes employees' attitudes toward saving, and makes them more likely to actively decide to save after the study concludes.

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Document Object Identifier (DOI): 10.3386/w23590

Published: Joshua Blumenstock & Michael Callen & Tarek Ghani, 2018. "Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan," American Economic Review, vol 108(10), pages 2868-2901. citation courtesy of

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