The Effect of Providing Peer Information on Retirement Savings Decisions

54 Pages Posted: 30 Aug 2014

See all articles by John Beshears

John Beshears

Harvard Business School; National Bureau of Economic Research (NBER)

James J. Choi

Yale School of Management; National Bureau of Economic Research (NBER)

David Laibson

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Brigitte C. Madrian

Brigham Young University Marriott School of Business; National Bureau of Economic Research (NBER)

Katherine L. Milkman

University of Pennsylvania - The Wharton School

Multiple version iconThere are 2 versions of this paper

Date Written: July 27, 2014

Abstract

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.

Suggested Citation

Beshears, John and Choi, James J. and Laibson, David I. and Madrian, Brigitte C. and Milkman, Katherine L., The Effect of Providing Peer Information on Retirement Savings Decisions (July 27, 2014). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2488817

John Beshears (Contact Author)

Harvard Business School ( email )

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James J. Choi

Yale School of Management ( email )

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David I. Laibson

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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Brigitte C. Madrian

Brigham Young University Marriott School of Business ( email )

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National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Katherine L. Milkman

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104
United States

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