Who Feels the Nudge? Knowledge, Self-Awareness and Retirement Savings Decisions / Anders Anderson, David T. Robinson.

Format:

Book

Author/Creator:

Anderson, Anders.

Contributor:

National Bureau of Economic Research.

Robinson, David T.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25061.

NBER working paper series no. w25061

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

Using a financial literacy survey of Swedish pension investors matched to actual retirement savings decisions, we argue that respondents can be broken into three groups: those who are financially literate, those who mistakenly believe they are financially literate, and those who know that they are not. We examine how these groups respond differently to informational nudges encouraging them to take charge of their own investments. Investors with mistaken beliefs responded to the nudge, and were more likely to work with mass-market advisors who steer them into high-fee funds. They underperform as a result. By comparison, those who either possess financial literacy or else understand that they do not possess financial literacy were less likely to respond to the nudge. They avoided advisors, stayed with the low-cost default fund, and therefore accumulated retirement savings more quickly.

Notes:

Print version record

September 2018.