Study • Finance · Savings
Active Vs. Passive Decisions and Crowdout in Retirement Savings Accounts.
Chetty et al. (2012), 'Active vs. Passive Decisions and Crowdout in Retirement Savings Accounts
Summary by Mark Egan
The authors used 45 million observations from Denmark to see whether retirement savings policies – such as tax subsidies or employer-provided pension plans – increase total saving for retirement or simply induce shifting across accounts. They find that automatic contributions are more effective at increasing savings rates than price subsidies for three reasons: (1) subsidies induce relatively few individuals to respond, (2) they generate substantial crowd-out conditional on response, and (3) they do not influence the savings behavior of passive individuals, who are least prepared for retirement.
Tactics used
TACTICS
Framing Effects
TACTICS
Active Choice
TACTICS
Automation
Behaviors addressed
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