The Effect of Providing Peer Information on Retirement Savings Decisions

Abstract

We conducted a field experiment in a 401(k) plan to measure the effect of disseminating information about peer behavior on savings.Low-saving employees received simplified plan enrollment or contribution increase forms.A randomized subset of forms stated the fraction of age-matched coworkers participating in the plan or age-matched participants contributing at least 6% of pay to the plan.We document an oppositional reaction: the presence of peer information decreased the savings of non-participants who were ineligible for 401(k) automatic enrollment, and higher observed peer savings rates also decreased savings.Discouragement from upward social comparisons seems to drive this reaction.

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