Borrowing to Save? The Impact of Automatic Enrollment on Debt

This research was made possible by generous grants from the National Institutes of Health (grants P01AG005842, P30AG034532, and R01AG021650), the Pershing Square Fund for Research on the Foundations of Human Behavior, the Smith Richardson Foundation, and the U.S. Social Security Administration (grant RRC0809840007), funded as part of the Retirement Research Consortium. We thank Brian Baugh, Brigham Frandsen, John Friedman, Ori Heffetz, Ted O’Donoghue, Daniel Reck, Jonathan Reuter, Barak Richman, Nick Roussanov, Richard Thaler, Jack VanDerhei, and audience members at the AEA Annual Meeting, BYU, Carnegie Mellon, CFPB, Cornell, the Miami Behavioral Finance Conference, MIT, NBER, NYU, the RAND Behavioral Finance Forum, SMU, Stanford, Texas Tech, UCL, University of Nebraska Lincoln, University of Pennsylvania, and Yale for helpful comments. We are extremely grateful for the research assistance of Ross Chu, Jonathan Cohen, Peter Maxted, and Charles Rafkin. Luke Gallagher from the U.S. Army Office of Economic and Manpower Analysis provided critical assistance in preparing the data. To access the data studied in this paper, the researchers entered a data use agreement that gave the U.S. Army Office of Economic and Manpower Analysis the right to review the paper prior to public release to ensure that no individuals were identifiable, that the data were correctly described, and that no policies or procedures were violated. This research was reviewed by the Harvard and NBER IRBs and determined to be “not human subjects research.” Beshears, Choi, Laibson, and Madrian have received additional grant support from the TIAA Institute and the National Employment Savings Trust (NEST). They have received research data from Alight Solutions. Beshears, Choi, and Madrian are TIAA Institute Fellows. Beshears is an advisor to and equity holder in Nutmeg Saving and Investment, a robo-advice asset management company. He has received research data from Voya Financial and the Commonwealth Bank of Australia. Choi has no additional disclosures. Laibson has received additional grant support from the Russell Sage Foundation. He is a member of the Russell Sage Foundation Behavioral Economics Roundtable and a member of the Federal Reserve Bank of Philadelphia Consumer Finance Institute Academic Advisory Board. He has received research data from the Financial Conduct Authority (U.K.). Madrian is a member of the Financial Industry Regulatory Authority (FINRA) Board of Governors, a member of the Consumer Financial Protection Bureau (CFPB) Academic Research Council, and a member of the Defined Contribution Institutional Investment Association (DCIIA) Academic Advisory Council. Skimmyhorn has received compensation from the Financial Industry Regulatory Authority (FINRA). See the authors’ websites for a complete list of outside activities. The views expressed here are those of the authors and do not reflect the views or position of the United States Military Academy, the Department of the Army, the Department of Defense, the Social Security Administration, any agency of the federal government, Harvard, Yale, BYU, William & Mary, or the NBER.

• data appendix

• May 21, 2019