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How Do Retirement Income Tools Affect Saving Decisions? Evidence From A Field Experiment

Sep 2016 to Sep 2017



TIAA-CREF Institute

Theory predicts that exponential-growth bias, the tendency to neglect compounding interest, will lead to suboptimal saving decisions.  In previous work, we show that this bias is prevalent and explains a meaningful amount of heterogeneity in retirement wealth accumulation.  In this project, we aim to investigate the effects of a retirement income tool designed to target this bias via a field experiment at a large employer.  Our results will provide evidence as to whether this intervention can mitigate the role of exponential-growth bias in retirement savings by analyzing whether the intervention has stronger effects on those who have higher levels of bias.  These interventions could serve as an important proof of concept for future interventions that lead individuals to make better-informed retirement saving decisions.