27 Pages Posted: 21 Sep 2002
Date Written: July 2002
Participants in 401(k) plans are more likely than other workers to list "retirement" as their main reason for saving, to hold individual retirement accounts and to invest in the stock market. There are two possible reasons for these differences: (1) workers who like to save choose to participate in the program; or (2) 401(k) participation educates workers about investing. I disentangle these explanations using the 1983-1989 Survey of Consumer Finances. I find that 401(k) participants have a greater interest in saving for retirement than other workers, suggesting that extrapolating from their saving behavior to that of the workforce at large could be misleading. 401(k) participation also appears to increase awareness of retirement saving, but the gains are largest among workers who already prioritize retirement saving.
Keywords: 401(k), social security, financial education, saving
JEL Classification: H31, H55, E21
Suggested Citation: Suggested Citation
Pence, Karen M., Nature or Nurture: Why Do 401(K) Participants Save Differently than Other Workers? (July 2002). FEDS Working Paper No. 2002-32. Available at SSRN: https://ssrn.com/abstract=325324 or http://dx.doi.org/10.2139/ssrn.325324