Absence of conflict of interest.
Citation
Highlights
- The study's objective was to examine the impact of informational and incentive-based interventions on retirement savings behavior. This profile focuses on the individuals who were contributing the 4 percent match or more to their 401(k). The authors investigated similar research questions for another sample, the profile can be found here.
- The study was a randomized controlled trial that assigned individuals to one of two treatment groups or a control group. Using administrative employee records, the authors conducted statistical models to compare the outcomes of the treatment and control groups.
- The study found that receiving a specific recommendation to increase the 401(k) contribution was associated with statistically significant increases in 401(k) contributions.
- The study received a high evidence rating. This means we are confident that the estimated effects are attributable to the informational and incentive-based interventions and not to other factors.
Intervention Examined
Information and Incentive-Based Interventions
Features of the Intervention
The study was a randomized controlled trial that examined the impact of four psychological frictions (retirement literacy, plan confusion, enrollment complexity, and present focus) on retirement savings behavior. A financial services organization invited employees to complete a survey. Of the 1,332 survey respondents, 357 individuals were eligible to participate in the study. The study participants were 401(k) plan-eligible, ages 25-55, earning less than $100,000 annually, and contributing 4-10% percent of their annual salary to their 401(k). The sample was mostly female and white, with an average age of 39.5. The average number of years employed at the firm was 8.4.
The participants were randomized to one of two conditions in the final survey module, to a treatment group or a control group. The treatment group received a specific recommendation about raising their 401(k) contribution rate. The control group received received a generic recommendation. Administrative employee records were used to obtain employee demographics and 401(k) enrollment and contribution amounts. The authors used a statistical model to compare the outcomes of the treatment and control groups.
Findings
Knowledge and skills for financial decision making
- The study found a significant relationship between receiving a specific recommendation (treatment group) and increasing the 401(k) contribution.
Considerations for Interpreting the Findings
Study participants were all employees at the same financial services organization and thus cannot be considered a representative sample of the general population.
Causal Evidence Rating
The quality of causal evidence presented in this report is high because it was based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to information and incentive-based interventions, and not to other factors.