Defined Contribution Pensions: Plan Rules, Participant Decisions, and the Path of Least Resistance / James J. Choi, David Laibson, Brigitte C. Madrian, Andrew Metrick.

Format:

Book

Author/Creator:

Choi, James J.

Contributor:

National Bureau of Economic Research.

Laibson, David.

Madrian, Brigitte C.

Metrick, Andrew.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8655.

NBER working paper series no. w8655

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Defined Contribution Pensions

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2001.

Summary:

We assess the impact on savings behavior of several different 401(k) plan features, including automatic enrollment, automatic cash distributions, employer matching provisions, eligibility requirements, investment options, and financial education. We also present new survey evidence on individual savings adequacy. Many of our conclusions are based on an analysis of micro-level administrative data on the 401(k) savings behavior of employees in several large corporations that implemented changes in their 401(k) plan design. Our analysis identifies a key behavioral principle that should partially guide the design of 401(k) plans: employees often follow 'the path of least resistance.' For better or for worse, plan administrators can manipulate the path of least resistance to powerfully influence the savings and investment choices of their employees.

Notes:

Print version record

December 2001.