How Much to Save? Decision Costs and Retirement Plan Participation

Last registered on August 20, 2019
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Pre-Trial

Trial Information

General Information

Title
How Much to Save? Decision Costs and Retirement Plan Participation
RCT ID
AEARCTR-0004588
Initial registration date
August 15, 2019

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
August 20, 2019, 10:55 AM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
United States of America
Region

Primary Investigator

Name
Richard Patterson
Affiliation
United States Military Academy
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Other Primary Investigator(s)

PI Name
William Skimmyhorn
PI Affiliation
William and Mary
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PI Name
Jacob Goldin
PI Affiliation
Stanford University
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PI Name
Tatiana Homonoff
PI Affiliation
New York University
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Additional Trial Information

Status
Completed
Start date
2016-01-27
End date
2019-08-15
Keywords
Finance & Microfinance
Additional Keywords
retirement savings, complexity, nudges, decision costs, household finance
JEL code(s)
D14, D91, G41
Secondary IDs
Abstract
Deciding how much to save for retirement can be complicated. Drawing on a field experiment conducted with the Department of Defense, we study whether such complexity depresses participation in an employer-sponsored retirement saving plan. We find that simplifying one dimension of the enrollment decision, by highlighting a potential rate at which non-participants might contribute, increases participation in the plan. Similar communications that did not include a highlighted rate yielded smaller effects. The results highlight how reducing complexity on the intensive margin of a decision (how much to contribute) can spill over into extensive margin behavior (whether to contribute at all).
External Link(s)

Registration Citation

Citation
Goldin, Jacob et al. 2019. "How Much to Save? Decision Costs and Retirement Plan Participation." AEA RCT Registry. August 20. https://doi.org/10.1257/rct.4588-1.0
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Experimental Details

Interventions

Intervention(s)
In this study, we investigate whether the complexity of the retirement savings decision depresses participation in retirement savings plans. We analyze the results of a field experiment conducted by the U.S. Department of Defense (DOD). The experiment involved the roughly 300,000 active duty U.S. Army servicemembers who were not enrolled in the Thrift Savings Plan(TSP), the defined contribution portion of the retirement plan the U.S. government offers to its employees. The DOD randomly assigned a subset of these individuals to receive a one-time email that provided information about how to enroll in the TSP and encouraged them to join. For some randomly assigned individuals, the email also attempted to reduce the complexity of the savings decision by highlighting a specific rate (i.e., 1%, 2%, ...8%) at which the individual could choose to contribute. A final group of individuals were randomly assigned to a control group that did not receive any email.
Intervention Start Date
2016-01-27
Intervention End Date
2018-03-01

Primary Outcomes

Primary Outcomes (end points)
(1) Participation in Thrift Savings Plan (TSP)
(2) Percent of income contributed
(3) Total savings
(4) Indicator for contributing specific rates (i.e. 1, 2,...,8%)
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Types of TSP funds
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
In January 2016, the Department of Defense (DOD) randomly assigned all active-duty Armed Service servicemembers who had not contributed to a TSP account (Including approximately 300,000 Army servicemembers) to be assigned to one of the following 10 treatment groups:
1) Control group (no intervention)
2) Receive a one-time email that provided information about how to enroll in the TSP and encouraged them to join.
3-10) Receive a one-time email that provided information about how to enroll in the TSP and encouraged them to join and the following the message: "Many servicemembers like you start by contributing at least X% of their basic pay into a Traditional or Roth TSP account,", where X% varied between 1%, 2,%, 3%, 4%, 5%, 6%, 7%, and 8% for treatment groups 3-10.
Experimental Design Details
Randomization Method
Last 2 digits of SSN
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
291,552 Army Servicemembers
Sample size: planned number of observations
291,552 Army Servicemembers
Sample size (or number of clusters) by treatment arms
291,552 Army Servicemembers
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
US Military Academy Human Research Protection Program
IRB Approval Date
2018-01-19
IRB Approval Number
18-054 Patterson-Skimmyhorn-Goldin-Homonoff
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials