Save & Invest

Using credit report records and data collected from several household surveys, we analyze changes in household debt and saving during the 2007 recession. We find that, while different segments of the population were affected in distinct ways, depending on whether they owned a home, whether they owned stocks, and whether they had secure jobs, the crisis’ impact appears to have been widespread, affecting large shares of households across all age, income, and education groups.

Doorways to Dreams Fund (D2D) is working to develop and test video games attractive to low-income and minority adults that will provide training in critical financial skills to improve financial decision-making. During the last year, D2D has conceived, developed and delivered the third and fourth titles in its growing library of financial literacy casual video games: Farm Blitz and Bite Club. In Farm Blitz, players take on the role of a farmer who must harvest crops to generate earnings, manage debt, save money, and weather unexpected emergencies.

The authors conducted a field experiment to evaluate the effect of receiving information about the retirement savings decisions of one's peers. Non-participants and low savers in one firm's 401(k) plan received letters enabling them to enroll or increase their plan contribution rate by returning a simple reply form. Some employees were randomly assigned to receive peer information: a statement about the fraction of their coworker peers who were participating in the plan or a statement about the fraction of their coworker peers who were contributing at least 6% of their salary to the plan.

This paper investigates the effectiveness of both videos and narratives in improving people's understanding of five basic concepts in financial planning: (1) compound interest; (2) inflation; (3) risk diversification; (4) tax treatment of retirement savings vehicles; and (5) employer matches of defined contribution savings plans. To that end the authors have administered a quiz about these concepts in the American Life Panel to establish a baseline of what respondents understand about these concepts.

This study surveyed thousands of Americans about their knowledge of retirement planning in general and Social Security in particular. It found that most Americans feel ill prepared for retirement and have a very low level of understanding of how the Social Security system works, when they should start claiming, and how much they are likely to receive in benefits. Respondents expressed a high level of trust in the Social Security Administration and would like more guidance from the agency on how to improve their retirement planning.

We study retirement savings decisions and outcomes in Oregon University System’s Optional Retirement Plan (ORP). During our sample period, 32% of ORP participants choose to invest through HIGH, which markets itself as providing personal face-to-face financial service. The other participants choose to invest through three lower-service providers, with 51% investing through LOW. Consistent with lower levels of financial literacy driving demand for financial advisors, we find that younger, less highly educated, and less highly paid employees are more likely to invest through HIGH.

This project examines how employer-provided financial education for newly hired workers affects participation in retirement savings plans. The investigators partnered with six large employers to explore what financial education is currently offered to new hires. Each employer provided individual data on workers hired in 2008 and 2009. This report assesses the impact of information and delivery methods on participation and contribution rates. Several findings emerge. There is strong evidence that employees respond to match incentives.

Prior research has demonstrated that defaults have a powerful influence on economic outcomes in a wide range of settings because individuals often passively accept default options. This paper examines the degree to which defaults become less powerful as they become more extreme. We study a firm with a defined contribution retirement savings plan in which employees are automatically enrolled at a 12% contribution rate, a rate that is considerably higher than those studied in previous work.

This annotated bibliography provides 52 abstracts of a representative sample of scholarly articles on the subject of the behavioral characteristics of U.S. investors, along with a glossary defining 72 terms commonly used in the literature on this topic.

Drawing on a comprehensive review of academic journal articles, the report reviews patterns of investor behavior that may be suboptimal and factors that may lead to such patterns. role of behavioral finance from the perspective of prospect theory, overconfidence and human sentiment, as well as explanations for a reluctance to invest including financial literacy and trust. It also discusses retirement saving inadequacy and reviews a series of common investment mistakes as well as behavioral patterns related to annuity and growth investing.