Publications
Publications
- 2024
Employer-Based Short-Term Savings Accounts
By: Sarah Holmes Berk, John Beshears, Jay Garg, James J. Choi and David Laibson
Abstract
We study the introduction of a choice architecture design intended to increase short-term savings among employees at five U.K. firms. Employees were offered the opportunity to opt into a payroll deduction program that auto-deposits funds from each paycheck into a short-term savings account from which withdrawals are possible at any time. We find that employees who opted into the program kept using it. Among employees whose accounts were created early enough to be observed over the first 12 months after their account activation and who did not separate from employment during this period, 96% still had a balance greater than £1 and 87% received an automatic payroll contribution in month 12. However, product take-up was very low: no more than 0.7% of eligible employees ever activated an account. Opt-in access to short-term savings programs does not elicit widespread participation.
Keywords
Citation
Berk, Sarah Holmes, John Beshears, Jay Garg, James J. Choi, and David Laibson. "Employer-Based Short-Term Savings Accounts." NBER Working Paper Series, No. 32074, January 2024.