Wharton Pension Research Council Working Papers

Fees, Framing, and Financial Literacy in the Choice of Pension Manager

Justine Hastings, Yale University and NBER
Olivia S. Mitchell, The Wharton School, University of Pennsylvania
Eric Chyn, Yale University and NBER

The published version of this Working Paper may be found in the 2011 publication: Financial Literacy: Implications for Retirement Security and the Financial Marketplace.


A growing literature shows how consumers make mistakes in a variety of different settings pertinent to financial decision-making. Using data from a randomized experiment in Chile, we show how different ways of presenting pension management fees shape consumer choices, and how responses to pension fee information varies by level of financial literacy. Our results indicate that, in choosing pension funds, those with lower levels of education, income, and financial literacy rely more on employers, friends, and coworkers, than on fundamentals. We also find that such individuals are more responsive to information framing when interpreting the relative benefits of different investment choices.


Date Posted: 07 August 2019