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Publications
  • November 2013
  • Article
  • Journal of Economic Behavior & Organization

Simplification and Saving

By: John Beshears, James J. Choi, David Laibson and Brigitte C. Madrian
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Abstract

The daunting complexity of important financial decisions can lead to procrastination. We evaluate a low-cost intervention that substantially simplifies the retirement savings plan participation decision. Individuals received an opportunity to enroll in a retirement savings plan at a pre-selected contribution rate and asset allocation, allowing them to collapse a multidimensional problem into a binary choice between the status quo and the pre-selected alternative. The intervention increases plan enrollment rates by 10 to 20 percentage points. We find that a similar intervention can be used to increase contribution rates among employees who are already participating in a savings plan.

Keywords

Retirement Savings; Simplification; Procrastination; Behavioral Economics; Saving; Motivation and Incentives; Retirement

Citation

Beshears, John, James J. Choi, David Laibson, and Brigitte C. Madrian. "Simplification and Saving." Journal of Economic Behavior & Organization 95 (November 2013): 130–145.
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About The Author

John Beshears

Negotiation, Organizations & Markets
→More Publications

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    • December 2023
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More from the Authors
  • Save More Today or Tomorrow: The Role of Urgency in Pre-commitment Design By: Joseph S. Reiff, Hengchen Dai, John Beshears, Katherine L. Milkman and Shlomo Benartzi
  • A Randomized Trial of Behavioral Nudges Delivered through Text Messages to Increase Influenza Vaccination among Patients with an Upcoming Primary Care Visit By: Mitesh S. Patel, Katherine L. Milkman, Linnea Gandhi, Heather N. Graci, Dena Gromet, Hung Ho, Joseph S. Kay, Timothy W. Lee, Jake Rothschild, Modupe Akinola, John Beshears, Jonathan E. Bogard, Alison Buttenheim, Christopher Chabris, Gretchen B. Chapman, James J. Choi, Hengchen Dai, Craig R. Fox, Amir Goren, Matthew D. Hilchey, Jillian Hmurovic, Leslie John, Dean Karlan, Melanie Kim, David Laibson, Cait Lamberton, Brigitte C. Madrian, Michelle N. Meyer, Maria Modanu, Jimin Nam, Todd Rogers, Renante Rondina, Silvia Saccardo, Maheen Shermohammed, Dilip Soman, Jehan Sparks, Caleb Warren, Megan Weber, Ron Berman, Chalanda N. Evans, Seung Hyeong Lee, Christopher K. Snider, Eli Tsukayama, Christophe Van den Bulte, Kevin G. Volpp and Angela L. Duckworth
  • Automating Short-Term Payroll Savings: Initial Evidence from a Large U.K. Experiment By: Sarah Holmes Berk, John Beshears, James J. Choi and David Laibson
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