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 less than the 4 percent match 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 providing a personalized contribution amount and match clarification, in combination with a small gift card incentive, was significantly associated with increased 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 Study
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, 730 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 less than the 4 percent match 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 three conditions in the final survey module, one of two treatment groups or a control group. Treatment group 1 received a specific recommendation about raising their 401(k) contribution rate and a clarification about the generosity of the match provided by their employer. Treatment group 2 received the same specific recommendation and plan match clarification, but also had a $10 Amazon gift card incentive. The control group received only a specific recommendation about raising their 401(k) contribution rate. 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 treatment 2 (personalized contribution, match contribution clarification, and gift card incentive) and increasing the 401(k) contribution in any amount and increasing the 401(k) contribution to the match rate.
- However, The study found no statistically significant relationship between treatment 1 (personalized contribution rate and match contribution clarification) and increasing the 401(k) contribution in any amount or increasing the 401(k) contribution to the match rate.
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.