Nudge

Nudge

Improving Decisions About Health, Wealth, and Happiness

Richard H. Thaler, Cass R. Sunstein

When the plan was launched in the spring of 2000, every participant who was then in the workforce was asked to choose a portfolio. In the years following the launch, new workers (mostly young people) have joined the plan, and they were also asked to choose a portfolio. But soon after the initial enrollment period, the government ended its advertising campaign encouraging participants to make an active choice. Moreover, private funds themselves greatly reduced their advertising aimed at attracting investments. Probably as a result of both these factors, the proportion of people choosing their own portfolios fell as well. For those workers joining the plan in April 2006 (the most recent enrollment period for which we have data), only 8 percent selected their own portfolios!* Because these new participants are primarily young workers, this percentage is most usefully compared with that of workers who were under age twenty-two when the plan was launched in 2000. That group chose their own portfolios 56.7 percent of the time in 2000, much more than now.

Link · 2502