The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior
Book • 2000
This paper examines the effects of automatic enrollment on 401(k) participation and savings behavior.
It finds that automatic enrollment significantly increases participation and that many employees retain the default contribution rate and fund allocation, attributing this to participant inertia and the perception of defaults as investment advice.
The findings have implications for the design of 401(k) plans and Social Security reform, emphasizing the importance of both economic and non-economic factors in individual savings behavior.
It finds that automatic enrollment significantly increases participation and that many employees retain the default contribution rate and fund allocation, attributing this to participant inertia and the perception of defaults as investment advice.
The findings have implications for the design of 401(k) plans and Social Security reform, emphasizing the importance of both economic and non-economic factors in individual savings behavior.
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Ben Thompson
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