Are Retirement Decisions Vulnerable to Framing Effects? Empirical Evidence from NL and the US

50 Pages Posted: 10 Jan 2013

See all articles by Federica Teppa

Federica Teppa

De Nederlandsche Bank

Maarten van Rooij

De Nederlandsche Bank; Netspar

Date Written: December 30, 2012


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

Teppa, Federica and van Rooij, Maarten, Are Retirement Decisions Vulnerable to Framing Effects? Empirical Evidence from NL and the US (December 30, 2012). De Nederlandsche Bank Working Paper No. 366, Available at SSRN: or

Federica Teppa (Contact Author)

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB

Maarten van Rooij

De Nederlandsche Bank ( email )

P.O. Box 98
Amsterdam, 1000 AB


Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE

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