How do Behavioral Approaches to Increase Savings Compare? Evidence from Multiple Interventions in the U.S. Army

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Wharton Pension Research Council Working Papers
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retirement saving
behavioral messaging
automatic enrollment
choice simplification
servicemembers
active choice
action steps
Economics
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Patterson, Richard W.
Skimmyhorn, William L.
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Information provision, choice simplification, social messaging, active-choice frameworks, and automatic enrollment all increase retirement savings. However, gauging the relative efficacy of these approaches is challenging because the supporting evidence derives from diverse populations over a long period. In this study, we leverage experimental and quasi-experimental variation in a constant setting, the U.S. military, to examine the effects of nearly two dozen experiments for four leading policy options (i.e., information emails, action steps, target contribution rates, active choice, and automatic enrollment) designed to increase retirement savings. Consistent with the previous literature, we find sizable effects on participation and cumulative contributions that increase with the intensity of the intervention. We then exploit cost data to complete the first cost-effectiveness analysis in the literature. Our analysis suggests that active choice programs are the most cost-effective method to generate new program participation and contributions for small, medium, and large firms, while automatic enrollment is more cost-effective for very large firms.

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2020-09-01
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The project described received funding from the TIAA Institute and Wharton School’s Pension Research Council/Boettner Center.
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