Year: 2005
Type: book-chapter
Abstract: Default options have an enormous impact on household choices. Such effects have now been extensively documented in the literature on 401(k) plans (Madrian and Shea 2001; Choi et al. 2002b, 2004). Defaults have been shown to affect participation, savings rates, rollovers, and asset al-location. For example, Choi et al. (2004) study three firms that use automatic enrollment. When employees at these firms are automatically enrolled in their 401(k) plan, only a tiny fraction opt out, producing participation rates exceeding 85 percent regardless of tenure. But when employees at these firms were not automatically enrolled, participation rates were significantly lower, ranging from 26 percent to 43 percent after six months of tenure, and from 57 percent to 69 percent after three years of tenure. 2
Language: English
Subfield: General Decision Sciences
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
Funder: National Science Foundation
OpenAlex ID: W1588069836