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The Role of Information and Social Interactions in Retirement Plan Decisions: Evidence from a Randomized Experiment
Esther Duflo, Emmanuel Saez
This randomized experiment assesses the impact of additional information on university employee enrollment in retirement savings plans. A randomly chosen set of employees were persuaded (via monetary reward) to attend an informational meeting regarding Tax Deferred Accounts (TDA) for retirement savings. Results show that, first: those who received an offer of monetary reward were three times more likely to attend the informational meeting. Second, in a follow-up months later, those who had attended the fair were significantly more likely to have enrolled in a TDA. Finally, there was also a significant increase in TDA enrollment amongst employees who did not receive the monetary encouragement but who worked in a department where others did, relative to employees who worked in a department where no one received monetary encouragement.
First, providing more accessible information, and encouraging employees to receive this information may go a long way in increasing planning and savings for retirement. Second, the final result of this experiment illustrates that information travels fairly efficiently from those with information to those without; therefore a policy encouraging peer-education may prove cost-effective.
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