Are Retirement Decisions Vulnerable to Framing Effects? Empirical Evidence from NL and the US
50 Pages Posted: 10 Jan 2013
Date Written: December 30, 2012
Abstract
This study investigates whether individual choices in the pension domain are vulnerable to the way alternatives are communicated to respondents. The analysis is based on a set of hypothetical questions posed in the DNB Household Survey as well as in the RAND American Life Panel on pension premium contributions and pension savings investment profiles. The design of the questions presented to the respondent in several alternative ways allows to test for the potential role of framing effects, as well as order and choice set effects. We find that framing has a significant and robust impact on individuals decisions. The effect is particularly strong for the alternative labeled as ‘standard’ option. In contrast, the answer categories order does not seem to be always significantly relevant. We also find that hypothetical preferences are consistent with the individual risk profile and actual portfolio allocations. The findings suggest that the presence of framing effects is strongly correlated with the complexity of decisions to be made and highlight the importance of communication with respect to retirement decisions.
Keywords: Framing effects, Individual decision making, Retirement behavior and pensions
JEL Classification: C5, C9, D12, G11
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Economic Preparation for Retirement
By Michael D. Hurd and Susann Rohwedder
-
Economic Preparation for Retirement
By Michael D. Hurd and Susann Rohwedder
-
When a Nudge Isn't Enough: Defaults and Saving Among Low-Income Tax Filers
By Erin Todd Bronchetti, Thomas S. Dee, ...
-
By Michael D. Hurd and Susann Rohwedder
-
Pension Liability Measurement and Intergenerational Fairness: Two Case Studies
-
Information to Members of Dc Pension Plans: Conceptual Framework and International Trends
-
By Kyoung Tae Kim, Samual Chen, ...
-
Is Information Overrated? Evidence from the Pension Domain
By Henriette Prast, Federica Teppa, ...
-
Is Information Overrated? Evidence from the Pension Domain
By Henriette Prast, Federica Teppa, ...
-
By Kyoung Tae Kim and Sherman D. Hanna