Working Paper | 2012

The Effect of Providing Peer Information on Retirement Savings Decisions

by John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian and Katherine L. Milkman

Abstract

We measure how receiving information about coworkers' savings behavior affects recipients' savings choices. Low-saving employees were sent a simplified 401(k) plan enrollment or contribution increase form. A randomized subset of forms included information on the (high) fraction of coworkers either participating in or contributing at least 6% of pay to the plan. We document an oppositional reaction: peer information decreased the savings of (unionized) recipients who were not eligible for automatic enrollment in the 401(k). We find no significant evidence that peer information altered the savings decisions of recipients who had previously opted out of automatic 401(k) enrollment.

Keywords: Information; Saving; Motivation and Incentives; Behavior; Retirement;

Citation:

Beshears, John, James J. Choi, David Laibson, Brigitte C. Madrian, and Katherine L. Milkman. "The Effect of Providing Peer Information on Retirement Savings Decisions." Working Paper, May 2012.