Choice Overload? Participation and Asset Allocation in French Employer-Sponsored Saving Plans / Marie Briere, James M. Poterba, Ariane Szafarz.

Format:

Book

Author/Creator:

Briere, Marie.

Contributor:

National Bureau of Economic Research.

Poterba, James M.

Szafarz, Ariane.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29601.

NBER working paper series no. w29601

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

This paper employs administrative data from one of the largest plan providers in France to investigate the role of plan and default characteristics in affecting whether employees participate in the plan and whether they accept its default investment option. The dataset includes information on the saving choices of 680,392 active employees at 1,610 firms. French employers have wide discretion in structuring employee saving plans. All plans must offer medium-term investments, which cannot be accessed for five years. Employers may also offer long-term investments that cannot be accessed until retirement. When plans include a long-term option, participation is lower than when the plan offers only more liquid medium term investments. The presence of a long-term saving option also reduces the take-up of the plan's default investment allocation, which must include a long-term component. One interpretation of the findings, consistent with the theory of choice overload, is that some employees are unwilling to forego the liquidity of the medium-term option but find it costly to make an active election when they opt out of the default, and therefore choose not to participate in the plan at all.

Notes:

Print version record

December 2021.