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When Nudges Are Forever: Inertia in the Swedish Premium Pension Plan

Author

Listed:
  • Henrik Cronqvist
  • Richard H. Thaler
  • Frank Yu

Abstract

To inform economists and policymakers about whether the effects of nudges are persistent in one specific context, we study the choice architecture of the Swedish Premium Pension Plan. The data we study consist of all initial choices and subsequent rebalancing activities by the entire population of 7.3 million retirement savers in Sweden during the period 2000 to 2016. Based on our analysis of these data, we conclude that the effects of nudging in this case were surprisingly persistent and seem to last nearly two decades, if not forever.

Suggested Citation

  • Henrik Cronqvist & Richard H. Thaler & Frank Yu, 2018. "When Nudges Are Forever: Inertia in the Swedish Premium Pension Plan," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 153-158, May.
    • Handle: RePEc:aea:apandp:v:108:y:2018:p:153-58
    Note: DOI: 10.1257/pandp.20181096
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    Cited by:

    1. Alpizar, Francisco & Carlsson, Fredrik & Lanza, Gracia, 2024. "On the perils of environmentally friendly alternatives," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    2. Jana Cahlikova & Lubomir Cingl & Katerina Chadimova & Miroslav Zajicek, 2021. "Carrots, Sticks, or Simplicity? Field Evidence on What Makes People Pay TV Fees," Working Papers tax-mpg-rps-2021-12, Max Planck Institute for Tax Law and Public Finance.
    3. Riitsalu, Leonore & Uusberg, Andero, 2021. "To double, quadruple, or keep? Semi-automated service increases micro-investments," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 95(C).
    4. Luca Congiu & Ivan Moscati, 2022. "A review of nudges: Definitions, justifications, effectiveness," Journal of Economic Surveys, Wiley Blackwell, vol. 36(1), pages 188-213, February.
    5. Johannes Hagen & Daniel Hallberg & Gabriella Sjögren, 2022. "A Nudge to Quit? The Effect of a Change in Pension Information on Annuitisation, Labour Supply and Retirement Choices Among Older Workers," The Economic Journal, Royal Economic Society, vol. 132(643), pages 1060-1094.
    6. Jan-Emmanuel De Neve & Clément Imbert & Johannes Spinnewijn & Teodora Tsankova & Maarten Luts, 2021. "How to Improve Tax Compliance? Evidence from Population-Wide Experiments in Belgium," Journal of Political Economy, University of Chicago Press, vol. 129(5), pages 1425-1463.
    7. Anders Anderson & David T. Robinson, 2018. "Who Feels the Nudge? Knowledge, Self-Awareness and Retirement Savings Decisions," NBER Working Papers 25061, National Bureau of Economic Research, Inc.
    8. Taylor, Rebecca L.C., 2019. "Bag leakage: The effect of disposable carryout bag regulations on unregulated bags," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 254-271.
    9. Hagen, Johannes & Malisa, Amedeus, 2022. "Financial fraud and individual investment behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 593-626.
    10. Mason, Richard, 2019. "Digital enrollment architecture and retirement savings decisions: Evidence from the field," Other publications TiSEM 58639618-e34e-4b5c-8c8c-a, Tilburg University, School of Economics and Management.
    11. Raymond Duch & Paulina Granados & Denise Laroze & Mauricio Lopez & Marian Ormeño & Ximena Quintanilla, 2021. "La Arquitectura De Elección Mejora La Selección De Pensiones," Working Papers 66, Superintendencia de Pensiones, revised Jan 2021.
    12. Mette T. Damgaard, 2020. "A decade of nudging: What have we learned?," Economics Working Papers 2020-07, Department of Economics and Business Economics, Aarhus University.
    13. Elinder, Mikael & Hagen, Johannes & Nordin, Mattias & Säve-Söderbergh, Jenny, 2020. "Who lacks pension knowledge, why and does it matter?," Working Paper Series 2020:24, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    14. Jim Leitzel, 2021. "Double defaults: Behavioral regulation of cocaine," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 5(1), pages 7-12, Septembre.
    15. Damgaard, Mette Trier, 2021. "A decade of nudging: What have we learned?," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2021(1), pages 1-21.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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