Who Feels the Nudge? Knowledge, Self-Awareness and Retirement Savings Decisions

Working Paper No. 25061 Using a financial literacy survey of Swedish pension investors matched to actual retirement savings decisions, we argue that respondents can be broken into three groups: those who are financially literate, those who mistakenly believe they are financially literate, and those...

Full description

Saved in:
Bibliographic Details
Published inNBER Working Paper Series p. 25061
Main Authors Anderson, Anders, Robinson, David T
Format Paper
LanguageEnglish
Published Cambridge National Bureau of Economic Research, Inc 01.09.2018
Subjects
Advisors
Decision making
Economic theory
Financial literacy
Financial planning
Personal finance
Retirement planning
Sweden
Online AccessGet full text

Cover

More Information
Summary:Working Paper No. 25061 Using a financial literacy survey of Swedish pension investors matched to actual retirement savings decisions, we argue that respondents can be broken into three groups: those who are financially literate, those who mistakenly believe they are financially literate, and those who know that they are not. We examine how these groups respond differently to informational nudges encouraging them to take charge of their own investments. Investors with mistaken beliefs responded to the nudge, and were more likely to work with mass-market advisors who steer them into high-fee funds. They underperform as a result. By comparison, those who either possess financial literacy or else understand that they do not possess financial literacy were less likely to respond to the nudge. They avoided advisors, stayed with the low-cost default fund, and therefore accumulated retirement savings more quickly.
ISSN:0898-2937
DOI:10.3386/w25061