class: center, middle, inverse, title-slide # Default Effects ## EC895; Fall 2022 ### Prof. Ben Bushong ### Last updated September 12, 2022 --- layout: true <div class="msu-header"></div> <div style = "position:fixed; visibility: hidden"> `$$\require{color}\definecolor{yellow}{rgb}{1, 0.8, 0.16078431372549}$$` `$$\require{color}\definecolor{orange}{rgb}{0.96078431372549, 0.525490196078431, 0.203921568627451}$$` `$$\require{color}\definecolor{MSUgreen}{rgb}{0.0784313725490196, 0.52156862745098, 0.231372549019608}$$` </div> <script type="text/x-mathjax-config"> MathJax.Hub.Config({ TeX: { Macros: { yellow: ["{\\color{yellow}{#1}}", 1], orange: ["{\\color{orange}{#1}}", 1], MSUgreen: ["{\\color{MSUgreen}{#1}}", 1] }, loader: {load: ['[tex]/color']}, tex: {packages: {'[+]': ['color']}} } }); </script> <style> .yellow {color: #FFCC29;} .orange {color: #F58634;} .MSUGreen {color: #14853B;} </style> --- class: inverseMSU name: Overview # Today ### **Our Outline:** (1) [The Standard Model](#section1) (2) [401(k) Savings: Introduction](#section2) (3) [Docuenting Default Effects](#section3) (4) [Facts About Household Finance](#section4) --- class: MSU name: section1 # Choice over Time **Exponential discounting:** When a person receives utility at different points in time, she seeks to maximize her *intertemporal utility*: `$$U \equiv u_{1}+\delta u_{2}+\delta ^{2}u_{3}+...+\delta ^{T-1}u_{T}$$` -- or put another way: `$$= \sum_{t=1}^{T}\delta ^{t-1}u_{t}\text{.}$$` -- - `\(u_{t}\)` is her **instantaneous utility** in period `\(t\)` (or her "well-being" in period `\(t\)`). -- - `\(\delta\)` is her **discount factor**, where `\(\delta \in (0,1]\)`. --- class: MSU name: section2 # 401(k) Savings 401(k) savings is the most common voluntary savings vehicle in the US. In brief: - Purpose is to let people set aside money for retirement - Free choice of contribution rate, and (mostly free choice) over asset allocation - Generally large penalties for early withdrawal - Employer sometimes pays matching contribution up to a threshold. - Tax deferred: employee pays (typically lower) marginal tax rate during retirement --- class: MSU name: section2 # 401(k) Savings ### Patterns of 401(k) Investment (Choi, Laibson, Madrian, and Metrick, 2005) - Two thirds of employees believe that they are saving too little. - A quarter of these intend to raise their savings in the next 2 months. - Almost nobody follows through. - Reported undersavers have low savings rates. - (Similar patterns in other surveys) --- class: MSU # Discussion Points **Should** people save more? Can we trust self-reported desires / interests? - Consumption drops discretely at retirement, which might suggest under-saving - But it's hard to show that people undersave (see [Erik Hurst's work](http://faculty.chicagobooth.edu/erik.hurst/research/retirement_consumption_survey_nber_final.pdf)) - Increased saving from automatic enrollment may come from more debt rather than from reduced consumption (Beshears, Choi, Laibson, Madrian, and Skimmyhorn, 2017) -- ### Costs of Non-Participation - Foregone tax benefits - Foregone employer match - (Implicitly) foregone consumption smoothing --- class: MSU # Tools to Combat Underuse There are a set of typically applied tools that employers use to increase savings in 401ks. - Financial education (we'll discuss this more later) - Vary employer matching contribution - Provide additional (or "better") choices -- ### The Power of Suggestion: Madrian and Shea (2001) Explores the impact of automatic enrollment on 401(k) savings behavior: - 401(k) participation (yes/no) - Contribution rates and asset allocation --- class: MSU # Breaking the 4th Wall This was a tremendously successful paper. **Why?** -- I conjecture all of the following played a role: - Concerns an *important* economic decision - There are potentially large welfare effects - Standard economics approaches were unsuccessful in raising savings - Standard economics approaches have a hard time explaining default effects -- In this sense, this paper provides a useful recipe for your own research and I encourage you to think about this type of environment. --- class: MSU # Details and Environment ### Madrian et al. 2001 Specifics Data came from a large, publicly traded Fortune 500 health care company. Employees had flexibility and could enroll inthe 401(k) savings plan any day by: - Filling out enrollment form, or - calling the 401(k) record keeper. `\(\Rightarrow\)` Small direct transaction costs of starting/changing 401(k) allocation -- Company had a 50% matching contribution for first 6%. (This is modal policy in "real world".) - E.g., if an employee chooses 4%, the company pays an additional 2%. If an employee chooses 10%, the company pays an additional 3%. - Employees first eligible after one year of employment (before change). --- class: MSU name: section3 # Findings The authors found a discontinuity of 401(k) plan **defaults** based on date of hire: Cohort 1 was hired April 1996 to March 1997: - Default: *no* enrollment - 1-year wait period for eligibility -- Cohort 2 was hired April 1997 to March 1998 - Default: *no* enrollment - Wait period until April 1998 -- Cohort 3 hired April 1998 to March 1999 - Default: enrollment - 3 percent contribution rate - 100 percent invested in money market fund (*Editorial comment:* gross) - Can change both contribution rate and fund allocation at any time --- class: MSU # Design <img src="graphics/MadrianShea_Design2b.png" width="500px" style="display: block; margin: auto;" /> --- class: MSU # Design ### Note: 401(k) plans are otherwise identical. <img src="graphics/MadrianShea_Design1b.png" width="500px" style="display: block; margin: auto;" /> --- class: MSU # Design ### Balance check: no large differences across cohorts <img src="graphics/MadrianShea_balance.png" width="500px" style="display: block; margin: auto;" /> --- class: MSU # Participation Rates ### Participation rates in 401(k) in June 1999 <img src="graphics/MadrianShea_Participation1b.png" width="500px" style="display: block; margin: auto;" /> -- Note that prior to automatic enrollment, participation increases with tenure. - But highest participation rate observed for employees hired under automatic enrollment --- class: MSU # Participation Rates cont. Differences look even more stark when accounting for differences in compensation (pay). <img src="graphics/MadrianShea_Participation1b.png" width="400px" style="display: block; margin: auto;" /> --- class: MSU # Defaults and Allocations ### Majority of participants keep the default contribution rate - WINDOW: 63% are at 0 percent (default), 4% at 3 percent - NEW: 14% are at 0 percent, 65% are at 3 percent (default) <img src="graphics/MadrianShea_Contribution1.png" width="500px" style="display: block; margin: auto;" /> --- class: MSU # Defaults and Allocations Share of assets invested in stocks varies dramatically by cohort. - OLD: 75%; WINDOW: 73%; NEW: 16% <img src="graphics/MadrianShea_Allocation1.png" width="500px" style="display: block; margin: auto;" /> --- class: MSU # Summary of Results 40 to 50 percent of individuals follow the default plan [(1a)] 401(k) participation rate (yes/no) [(1b)] Contribution rate and asset allocation -- "Suggested choice" not very attractive unless default [(2a)] WINDOW cohort resembles OLD cohort. [(2b)] WINDOW cohort does *not* follow NEW cohort default (which could be have been perceived as choice suggested by the company). -- Large effects for unlikely participants in old plan (e.g., lower-income employees and minorities). Effect of default falls over time, but is still large after two years. --- class: MSU # Robustness of Results Evidence from another company (B). This company switched from OLD to NEW to OLD; shows previous results are very robust. *See Choi, Laibson, Madrian, et al. (2005).* <img src="graphics/Choi_Figure1A.png" width="500px" style="display: block; margin: auto;" /> --- class: MSU # Robustness of Results Evidence from **another** company (C). Company C switched from OLD to NEW to NEW2. <img src="graphics/Choi_Figure1B.png" width="500px" style="display: block; margin: auto;" /> --- class: MSU # Discussion of Results ### Is automatic enrollment optimal? Reasonable to argue that default effects are not informative of optimal saving plans. Need evidence showing - OLD cohort under-saving; but it's possible that - NEW cohort **over**-saving -- What we do know. Automatic enrollment: - Lowers contribution rate, conditional on participating. That is, it seems to make some people save *less*, and - May even decrease overall savings after a few years. -- These effects largely due to: 1. Lower contribution rates due to default 2. More conservative asset allocations --- class: MSU # Active Choice *from Carroll, Choi, Laibson, Madrian, and Metrick (2009)* ### Setting: large Fortune-500 Company in the financial services industry. Comparison between: - Before: active choice within 30 days of hire (paper-based) - After: no-enrollment default (phone-based) -- <img src="graphics/Carroll_Design.png" width="500px" style="display: block; margin: auto;" /> --- class: MSU # Balance Check <img src="graphics/Carroll_Balance.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Results of Active Choice ### Large, significant effects of active choice ACTIVE: 69%. OLD2 41% (at month 3) - Compare to NEW (86%) and OLD (57%) in MS01 after `\(>\)` 6 months. Does not depend on month of hire (see below) -- <img src="graphics/Carroll_Participation.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Results of Active Choice ### Active choice increases (unconditional) contribution rate. - ACTIVE: 4.8%. OLD2: 3.5% - (Note that longitudinal data becomes only available after 9 months). <img src="graphics/Carroll_Contribution1.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Results of Active Choice ### **Lower** conditional contribution rate under active choice - ACTIVE:6.8%. OLD2: 7.5% (at month 9) - Obvious selection effect at play: marginal individuals have lower contribution rates. <img src="graphics/Carroll_Contribution2.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Summary ACTIVE resembles NEW and markedly differs from OLD and OLD2. - Suggests Madrian and Shea (2001) default alleviated under-saving. -- Effect of default mostly disappears after three years. - But no catch-up in levels - Moreover, individuals change employers frequently in these datasets. --- class: MSU # Cronqvist and Thaler (2004) Evidence from privatization of Social Security in Sweden in 2000 - 456 funds, 1 default fund (chosen by government) -- In year 2000: - Choice of default is discouraged with massive marketing campaign. Yet among new participants, 43.3 percent chooses default -- In year 2003: - End of marketing campaign. Among new participants, 91.6 percent chooses default - Portfolio actively chosen in 2000 does *worse* than default (see Table 1). --- class: MSU # Cronqvist and Thaler (2004) <img src="graphics/CronqvistThaler.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Caveats, Further Research Active choice less attractive if consumers are less financially sophisticated. - See also Bhargava, Loewenstein, and Sydnor (2015a) - Handel (2013a): another setting in which active choice seems to lower welfare. -- ### Punchline: Lots of interesting open questions about active choice vs defaults. --- class: MSU # Substitution of Assets *from Chetty, Freidman, Leth-Petersen, Nielsen, and Olsen (2014)* Okay, employees largely follow default 401(k) plans. - What if they compensate changed savings through other assets? E.g., savings in bank accounts, stock participation, etc. And what happens to credit card debt? -- ### To answer such questions, we would need comprehensive asset information - Only partial, suggestive information in Madrian and Shea (2001) - No such information in Carroll, Choi, Laibson, et al. (2009) -- Chetty et al. (2014): access to comprehensive data from Denmark including: - Employer-contributed pension(s), individual-chosen pension contributions, and other savings. -- See Raj's [Ely Lecture](http://events.mediasite.com/Mediasite/Play/44057958d9fb44198c0f6a8ae47c35cd1d) for a discussion. --- class: MSU # Design - Event-study design: examine workers that switch employers - Find employers and individuals that contribute to same account. -- - Inferential step: note employer contribution is a perfect substitute for individual saving. <img src="graphics/Chetty_Switchers1.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Sanity Check(s) ### 1. Does bunching at zero savings cause these patterns? Seems like no. Restricting sample to employees with positive savings does not change the observed patterns. <img src="graphics/Chetty_Switchers2.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Sanity Check(s) ### 2. How many individuals switch their individual pensions? Put another way: what fraction fully offsets the employer pension change? The "surprise" answer is essentially zero! <img src="graphics/Chetty_Switchers3.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Concerns and Caveats ### This is not the perfect setup. In the ideal experiment, we could randomize automatic contributions holding fixed total compensation. - Chetty, Freidman, Leth-Petersen, et al. (2014) approximate ideal experiment by using changes in employer-provided pension contributions due to job changes. - **But job changes are endogenous.** Could this explain the results? -- - No pre-trends towards higher individual pension contributions prior to year 0. - The vast majority of individuals do not change their individual pension contribution at the time of the job switch. --- class: MSU # Additional Evidence Scatterplot of change in employer pension vs change in total contributions suggests **nearly complete pass-though of employer pensions savings**. <img src="graphics/Chetty_TotalPensions1.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Additional Evidence ### These effects are meaningful in the long run. <img src="graphics/Chetty_Longrun.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Preliminary Summary About 85% of individuals are "passive savers": - They respond passively to changes in employer contribution. - Employer contribution is very effective tool to affect **total** savings. - Effect is highly persistent and affects wealth at retirement. -- Contrast this with the (non) impact of financial education on retirement savings: - Positive, but only moderate effects (Duflo and Saez, 2003) -- Next we'll contrast this with the impact of a reduced subsidy (14 cents per DKr) --- class: MSU # Reducing Savings Subsidies <img src="graphics/Chetty1.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Reducing Savings Subsidies <img src="graphics/Chetty2.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Reducing Savings Subsidies <img src="graphics/Chetty3.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Effects of Tax Subsidies Aggregate reduction is entirely driven by 19% of treated households who completely stop contributing to pensions - Remaining 81% do not change their retirement contributions at all - Suggests most individuals are inattentive to savings incentives or procrastinate in planning for retirement -- Moreover, 90% of the reduction in retirement contributions is offset by more saving in non-retirement accounts (“crowd-out”) - Each $1 of marginal expenditure on tax subsidies raises total personal saving by approximately 1 cent --- class: MSU # Organ Donations ### Final evidence: defaults have huge effects for rates of organ donations. <img src="graphics/Default_organs.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Preliminary Summary (cont.) Defaults can have powerful effects. - In 401(k) savings: defaults seem to be most effective policy tool. - Defaults are also very cheap. -- Distributional aspects not obvious. - 401(k) default effects appear to be larger among the poor. *Why?* - Is it because the default contribution is closer to optimal for the poor? - Or are the poor more inattentive or more likely to procrastinate? - Or is switching more costly for the poor? --- class: MSU # Preliminary Summary (cont.) ### Optimal defaults, active choice, and welfare (Carroll, Choi, Laibson, et al., 2009) What is the optimal default? - Consumer heterogeneity makes active choice more attractive. - But active choice only improves outcomes if consumers choose what is good for them. -- What are the welfare effects of defaults (Bernheim, Ray, and Yeltekin, 2015) - Do individuals prefer defaults? - Do firms use defaults optimally? --- class: MSU # Explaining Default Effects ### Some candidate explanations / key ingredients - Awareness - Implicit endorsement - Inattention/memory - Present bias (+ naivete) - Disliking making choices (why?) - **Others?** --- class: MSU # Blumenstock, Callen, and Ghani (2018) ### Cell phone-based savings account in Afghanistans - Accounts include automatic payroll deduction plan - Random variation in default (in or out) and matching contribution -- ## Two main contributions: 1. Does default enrollment increase savings? 2. Attempt to rule in/out potential mechanisms --- class: MSU # Results <img src="graphics/Blumenstock_default.png" width="550px" style="display: block; margin: auto;" /> --- class: MSU # Potential Mechanisms ### 1. Lack of awareness/understanding that (and how) contribution rate can be changed - Seems unlikely. Participants underwent extensive training - Everyone knows and understands product features. - Very low transaction costs -- ### 2. Employer endorsement: "My employer knows better." - Individual-level randomization - Everyone is told explicitly about randomization -- ### 3. Inattention/memory - SMS reminders - Phone surveys --- class: MSU # Present Bias Present bias, measured in a price list, robustly predicts propensity to follow default. -- Financial consultation intervention moves employees from their default. - Financial consultation interpreted as reducing the mental costs of switching. - Or are people just worried about making mistakes? - Related twist: Individuals tend to delay the financial consultation visit - Interesting read: [Why Investing is So Complicated](http://www.nytimes.com/2015/07/12/upshot/investing-in-the-dark-the-biggest-cost-of-fear-is-paralysis.html) --- class: MSU # Defaults in Health Insurance Very active literature studying defaults and mistakes in active choice in health insurance; see Chandra, Handel, and Schwartzstein (2019) for a review. -- In US, people often have option of choosing their health insurance or prescription drug plan each year. There is typically a default option: *what you chose last year.* - People are very likely to stick with default (inertia) -- - Even when the plan loses them money relative to the best option - As plans evolve over time, they often move even further from optimum (Handel, 2013b) - Likelihood of making active choice does not seem to depend on how bad the default option is relative to the best option (Brot-Goldberg, Layton, Vabson, and Wang, 2021) --- class: MSU # Active Choice in Health Insurance ...But forcing active choice does not seem to help much! -- - Largely, because people choose poorly. - Often choose dominated plans, likely due to poor understanding of health insurance (e.g. Bhargava, Loewenstein, and Sydnor (2017)) - Seem to overweight premiums compared to out-of-pocket payments (Abaluck and Gruber, 2011) --- class: MSU # Welfare Implications ### Consumers are losing substantial amounts of money due to inertia and poor active choice in health insurance (around $2000 per year in Handel (2013b) ) -- Inertia + poor active choice also reduce market discipline for suppliers - Less understanding of how to improve things - Reducing the size of choice sets may not help in itself (Bhargava, Loewenstein, and Sydnor, 2017) -- - Educating people about these plans seems difficult to do (Abaluck and Gruber, 2022) - Removing bad choices (e.g. dominated options) from choice set is likely to improve welfare --- class: inverseMSU # Coming Soon ## How do we explain default effects? ### (Issues with) Self Control. We'll look at theory, evidence, and measurement ### Please read O'Donoghue and Rabin. It'll help to have read it in advance. --- class: MSU # Notes on Household Finance The nature of the conflict between selves is often seen in our daily activities. However, as PhD Economists, we are often looking for smoking guns in the domain where our expertise lies (economics). -- In the next mess of slides, I will make the argument that one domain worthy of lots of additional exploration is *household finance.* I'll present a series of facts, many of which I will argue stem from a conflict between selves. But this is a bold assertion and you should be skeptical and inquisitive. --- class: MSU section: section4 # Nine Facts About Household Finance Households in the United States: 1. Have low levels of financial literacy 2. Have very few liquid assets (live hand to mouth) 3. Have substantial illiquid wealth 4. Have a high marginal propensity to consume out of liquid wealth 5. Have a low marginal propensity to consume out of illiquid wealth 6. Choose suboptimal financial service products 7. Barely change their behavior after financial education interventions 8. Have misaligned financial intentions and financial actions 9. Make financial choices that can be manipulated --- class: MSU # Financial Literacy (This is one of the only times I'll discuss such things in this course.) Assessing literacy often comes down to simple questions such as: > Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow? >i) More than $102 >ii) Exactly $102 >iii) Less than $102 >iv) Don’t know >v) Refuse to answer --- class: MSU # Financial Literacy > Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, would you be able to buy with the money in this account:” >i) More than today >ii) Exactly the same >iii) Less than today >iv) Don't know >v) Refuse to answer --- class: MSU # Financial Literacy > Do you think the following statement is true or false? Buying a single company stock usually provides a safer return than a stock mutual fund. >i) True >ii) False >iii) Don't know >iv) Refuse to answer --- class: MSU # Financial Literacy: Data Data from Lusardi and Mitchell (2014) <img src="graphics/literacy.png" width="800px" style="display: block; margin: auto;" /> --- class: MSU # Hand-to-Mouth Living ### A Fact Forty-six percent of U.S. adults report that they either could not come up with $400 to cover an emergency expense, or would have to borrow or sell something to do so. (Board of Governors of the Federal Reserve System, 2016). -- ### Another Fact Most of these households are not negative net worth. --- class: MSU # "Wealthy" Hand-to-Mouth Data from Kaplan, Violante, and Weidner (2014) <img src="graphics/htm1.png" width="500px" style="display: block; margin: auto;" /> --- class: MSU # "Wealthy" Hand-to-Mouth Data from Laibson, Lee, Maxted, Repetto, Tobacman (2022) *(Composite of 2013, 2016, 2019 surveys)* <img src="graphics/htm2.png" width="700px" style="display: block; margin: auto;" /> --- class: MSU # Liquidity and Consumption - Shapiro (2005): People on food stamps exhibit a monthly caloric cycle wherein calories drop 10-15% over the month -- - Parker (2014): Nielsen data around 2008 Economic Stimulus Payments suggests a within-year MPX of 60% -- - Ganong and Noel (2016): when unemployment insurance runs out (a predictable event), household consumption drops by 11%. -- - Fagereng, Holm, and Natvik (2020): "Low-liquidity winners of the smallest prizes (around $1500) are estimated to spend all within the year of winning. The corresponding estimate for high-liquidity winners of large prizes ($8300-150K) is slightly below one half." -- - Gerard and Naritomi (2021): “Displaced workers eligible for both UI and SP increase consumption at layoff by 35% despite experiencing a 17% consumption loss after they stop receiving any benefits” -- *Also see Shea (1995), Mastrobuoni and Weinberg (2009), Hastings and Washington (2010), Olafsson and Pagel (2018), Stephens and Toohey (2018)* --- class: MSU # Works Cited [1] J. Abaluck and J. Gruber. "Choice inconsistencies among the elderly: evidence from plan choice in the Medicare Part D program". In: _American Economic Review_ 101.4 (2011), pp. 1180-1210. [2] J. Abaluck and J. Gruber. "When Less is More: Improving Choices in Health Insurance Markets". In: _Review of Economic Studies_ Forthcoming (2022). [3] D. Bernheim, D. Ray, and S. Yeltekin. "Poverty and Self-control". In: _Econometrica_ 83.5 (2015), pp. 1877-911. [4] J. Beshears, J. J. Choi, D. Laibson, et al. _Borrowing to Save? The Impact of Automatic Enrollment on Debt_. Tech. rep. Working paper, 2017. [5] S. Bhargava, G. Loewenstein, and J. Sydnor. "Do Individuals Make Sensible Health Insurance Decisions? Evidence from a Menu with Dominated Options". In: _mimeo_ (2015). [6] S. Bhargava, G. Loewenstein, and J. Sydnor. "Choose to lose: Health plan choices from a menu with dominated option". In: _The Quarterly Journal of Economics_ 132.3 (2017), pp. 1319-1372. --- class: MSU # Works Cited [1] J. Blumenstock, M. Callen, and T. Ghani. "Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan". In: _American Economic Review_ 108.10 (2018), pp. 2868-901. [2] Z. C. Brot-Goldberg, T. Layton, B. Vabson, et al. _The Behavioral Foundations of Default Effects: Theory and Evidence from Medicare Part D_. Tech. rep. National Bureau of Economic Research, 2021. [3] G. D. Carroll, J. J. Choi, D. Laibson, et al. "Optimal Defaults and Active Decisions". In: _Quarterly Journal of Economics_ 124.4 (2009), pp. 1639-1674. [4] A. Chandra, B. Handel, and J. Schwartzstein. "Behavioral economics and health-care markets". In: _Handbook of Behavioral Economics: Applications and Foundations 1_. Vol. 2. Elsevier, 2019, pp. 459-502. [5] R. Chetty, J. N. Freidman, S. Leth-Petersen, et al. "Active vs. Passive Decisions and Crowd-Out in Retirement Savings Accounts". In: _Quarterly Journal of Economics_ 129.3 (2014), pp. 1141-1219. --- class: MSU # Works Cited [1] J. J. Choi, D. Laibson, B. C. Madrian, et al. "Saving for Retirement on the Path of Least Resistance". (2005). [2] H. Cronqvist and R. H. Thaler. "Design Choices in Privatized Social-Security Systems: Learning from the Swedish Experience". In: _American Economic Review_ 94.2 (2004), pp. 424-428. [3] E. Duflo and E. Saez. "The Role of Information and Social Interactions in Retirement Plan Decisions: Evidence from a Randomized Experiment". In: _Quarterly Journal of Economics_ 118.3 (2003), pp. 815-842. [4] B. Handel. "Adverse Selection and Inertia in Health Insurance Markets: When Nudging Hurts". In: _American Economic Review_ 103.7 (2013), pp. 2643-2682. [5] B. R. Handel. "Adverse selection and inertia in health insurance markets: When nudging hurts". In: _American Economic Review_ 103.7 (2013), pp. 2643-82. [6] B. C. Madrian and D. F. Shea. "Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior". In: _Quarterly Journal of Economics_ 116.4 (2001), pp. 1149-1187.