Personalized Information as a Tool to Improve Pension Savings: Results from a Randomized Control Trial in Chile

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Date and Time: 
Monday, November 28, 2016
2:00 pm – 3:30 pm
Speaker: 
José Tessada
Pontificia Universidad Católica de Chile
Abstract: 

We randomly offer low- to middle-income workers in Chile personalized versus generalized information regarding their pension savings. We find that personalized information,overall, increased the probability that someone would make a voluntary contribution to their pension fund in the year following the intervention and also increase the amount of voluntary savings in their pension fund, although the effect is fading out over time and is not sufficient to significantly alter future pensions. We argue that this change is due to the personalization of information and not to a general nudge since this effect is strongest for individuals who overestimated their pension at the time of the intervention. We find no evidence that savings outside the official pension system were crowded out by our intervention but found that some individuals retired more quickly after receiving personalized information. This suggests that a lack of understanding how the pension system may affect one’s personal situation may explain at least part of the low contribution rates in a defined contribution system but that such information has a limited benefit without additional mechanisms to generate longer-lasting behavioral changes.