Study • Finance · Savings
Incorporating Employee Heterogeneity Into Default Rules for Retirement Plan Selection.
Goda, Manchester (2010), "Incorporating employee heterogeneity into default rules for retirement plan selection", NBER Working Paper
Summary by Mark Egan
The authors studied the UK Winter Fuel Payment (WFP), a cash transfer to households aged over 60. The WFP can range from £100-£300 and is usually given in November / December. Standard economic theory implies that the labelling of cash transfers or cash-equivalents (e.g. child benefits, food stamps) should have no effect on spending patterns but this is not the case here. Exploiting sharp eligibility criteria in a regression discontinuity design, the authors found evidence of a behavioural effect of the labelling. If households were given an unconditional, neutrallynamed cash transfer of £100, they would be expected to spend £3 of it on fuel. If it is called Winter Fuel Payment, they spend an average of £41 on fuel.
Tactics used
TACTICS
Smart Defaults
Behaviors addressed
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