Fed/GFLEC Financial Literacy Seminar Series

November 7, 2013

3:00 PM - 4:30 PM

Seminar IV: Small Cues Change Savings Choices

« Event's Main Page

James Choi

Professor of Finance
Yale School of Management


FinLit Talks: Interviews with Financial Literacy Thought Leaders

LOCATION

George Washington University School of Business
Duquès Hall, Room 651
2201 G Street NW (main entrance on 22nd Street between G and H Streets)

Bio: James Choi

Professor Choi’s research spans behavioral finance, behavioral economics, household finance, capital markets, health economics, and sociology. His work on default options has led to changes in 401(k) plan design at many U.S. corporations and has influenced pension legislation in the United States and abroad. In other papers, he has investigated topics such as the influence of racial, gender, and religious identity on economic preferences, investor ignorance of mutual fund fees, the effect of deadlines and peer information on savings choices, how retail investor sentiment in China affects stock returns, and the use of subtle planning prompts to increase vaccination rates.

Professor Choi is a recipient of the TIAA-CREF Paul A. Samuelson Award for outstanding scholarly writing on lifelong financial security. He is a member of the FINRA Investor Issues Committee and a TIAA-CREF Institute Fellow.

 


 

Abstract

We present evidence from field experiments that savings choices are significantly affected by numerical cues in the environment, even when these cues are at best minimally informative. We randomized the one- or two-sentence savings cues present in emails to employees about their 401(k) savings plan. High savings cues increased 401(k) contribution rates by up to 2.9% of income in a pay period, and low savings cues decreased 401(k) contribution rates by up to 1.4% of income in a pay period. Cues affected 401(k) contribution rates for up to a year after the email.