The Effect of Providing Peer Information on Retirement Savings Decisions
The Effect of Providing Peer Information on Retirement Savings Decisions
7 July, 2020 •Similar Articles
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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 enrolment or contribution increase forms. A randomized subset of forms stated the fraction of age‐matched co-workers 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 enrolment, and higher observed peer savings rates also decreased savings. Discouragement from upward social comparisons seems to drive this reaction.