The Power of Percentage: Quantitative Framing of Pension Income
CentER Discussion Paper Series No. 2017-048
31 Pages Posted: 8 Dec 2017 Last revised: 16 Jan 2018
Date Written: December 4, 2017
We investigate whether the quantitative frame used to communicate future pension income to plan members matters for perceived pension income adequacy. We allocate plan members randomly to one of four pension income framing conditions: annual pension income, monthly pension income, pension income as percentage of current income, pension income as decimal of current income. We find that expressing projected pension income as a percentage (decimal) of current income significantly increases (decreases) the probability that a plan member perceives the pension income as too low. This effect is robust to adding retirement savings attitude. In addition, we find significant and intuitive effects of household wealth, income, age and education on perceived pension income adequacy. We discuss our findings against the backdrop of previous studies on the effect of numeric frames on perceptions, provide suggestions for further research and draw conclusions for pension communication and survey design.
Keywords: framing effects, pension income, perceived adequacy
JEL Classification: C5, C9, D12, G11
Suggested Citation: Suggested Citation