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ERIC Number: EJ1013225
Record Type: Journal
Publication Date: 2013
Pages: 38
Abstractor: As Provided
Reference Count: 37
ISBN: N/A
ISSN: ISSN-0022-166X
Incorporating Employee Heterogeneity into Default Rules for Retirement Plan Selection
Goda, Gopi Shah; Manchester, Colleen Flaherty
Journal of Human Resources, v48 n1 p198-235 Win 2013
We study the effect of incorporating heterogeneity into default rules by examining the choice between retirement plans at a firm that transitioned from a defined benefit (DB) to a defined contribution (DC) plan. The default plan for existing employees varied discontinuously depending on their age. Employing regression discontinuity techniques, we find that the default increased the probability of enrollment in the default plan by 60 percentage points. We develop a framework to solve for the optimal default rule analytically and numerically and find that considerable welfare gains are possible if defaults vary by observable characteristics. (Contains 8 tables, 7 figures, and 22 footnotes.)
University of Wisconsin Press. 1930 Monroe Street, Madison, WI 53711-2059. Tel: 608-263-0668; Fax: 608-263-1173; e-mail: journals@uwpress.wisc.edu; Web site: http://www.wisc.edu/wisconsinpress/journals
Publication Type: Journal Articles; Reports - Research
Education Level: N/A
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A