The Effect of Providing Peer Information on Retirement Savings Decisions

John  Beshears; James J. Choi; David  Laibson; Brigitte C. Madrian; Katherine L. Milkman

Article | Journal of Finance

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

Using a field experiment in a 401(k) plan, we 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 nonparticipants 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.

Keywords: Saving; Decision Choices and Conditions; Retirement;

Format: Print

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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." Journal of Finance 70, no. 3 (June 2015): 1161–1201.

In 2016, members of the U.S. Women's National Soccer Team (WNT) took steps to fight for equal pay relative to the U.S. Men's National Soccer Team. Their legal representative declared that the memorandum of understanding governing the relationship between the players and the U.S. Soccer Federation (USSF) was terminable at will. If a court agreed with this position, the players could threaten to strike in advance of the upcoming Olympics. In addition, five of the top WNT players filed a wage-discrimination complaint against the USSF with the Equal Employment Opportunity Commission. This case describes the history of the WNT and the USSF leading up to these events.

In 2016, members of the U.S. Women's National Soccer Team (WNT) took steps to fight for equal pay relative to the U.S. Men's National Soccer Team. Their legal representative declared that the memorandum of understanding governing the relationship between the players and the U.S. Soccer Federation (USSF) was terminable at will. If a court agreed with this position, the players could threaten to strike in advance of the upcoming Olympics. In addition, five of the top WNT players filed a wage-discrimination complaint against the USSF with the Equal Employment Opportunity Commission. This case describes the events following from the actions of the WNT players.

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The Effect of Providing Peer Information on Retirement Savings Decisions

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