Fees, Framing, and Financial Literacy in the Choice of Pension Manager

28 Pages Posted: 18 Sep 2010 Last revised: 26 Nov 2011

See all articles by Justine S. Hastings

Justine S. Hastings

Brown University; National Bureau of Economic Research (NBER)

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; University of Pennsylvania - The Wharton School, Pension Research Council; National Bureau of Economic Research (NBER)

Eric T. Chyn

University of Virginia - Department of Economics

Date Written: July 16, 2010

Abstract

A growing literature shows how consumers make mistakes in a variety of different settings pertinent to financial decision-making. Using data from a randomized experiment in Chile, we show how different ways of presenting pension management fees shape consumer choices, and how responses to pension fee information varies by level of financial literacy. Our results indicate that, in choosing pension funds, those with lower levels of education, income, and financial literacy rely more on employers, friends, and coworkers, than on fundamentals. We also find that such individuals are more responsive to information framing when interpreting the relative benefits of different investment choices.

Keywords: financial literacy, pension, income, education, saving, manager, participants, Chile

Suggested Citation

Hastings, Justine and Mitchell, Olivia S. and Chyn, Eric T., Fees, Framing, and Financial Literacy in the Choice of Pension Manager (July 16, 2010). Pension Research Council WP2010-09, Available at SSRN: https://ssrn.com/abstract=1678077 or http://dx.doi.org/10.2139/ssrn.1678077

Justine Hastings

Brown University ( email )

Box 1860
Providence, RI 02912
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Olivia S. Mitchell (Contact Author)

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

University of Pennsylvania - The Wharton School, Pension Research Council ( email )

3302 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Eric T. Chyn

University of Virginia - Department of Economics ( email )

237 Monroe Hall
P.O. Box 400182
Charlottesville, VA 22904-418
United States

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