Economics and BAFI Research Seminar

Please join the Economics and Banking and Finance Departments for a research seminar.  This event is open to all Case Western Reserve University faculty, Ph.D. students, economic majors and minors, and those interested in economics research.

Contact Teresa Kabat at teresa.kabat@case.edu or 216.368.4110 for additional information.

ABSTRACT: There is growing concern about households’ ability to make appropriate savings
decisions. Providing employees information about their coworkers’ savings behavior is one
natural way to offer guidance. We conducted a field experiment in a 401(k) plan to measure the
effect of such peer information on savings choices. Low-saving employees were sent a simplified plan enrollment or contribution increase form. A randomized subset of forms included information on the (high) fraction of coworkers either participating in or contributing at least 6% of pay to the plan. In contrast to prior literature, we document an oppositional reaction: peer information decreased the savings of non-participants who were not eligible for automatic
enrollment in the 401(k). Discouragement from upward social comparisons seems to play a role in the oppositional reaction. The presence of peer information did not on average significantly alter the savings decisions of recipients who had previously opted out of automatic 401(k) enrollment.