Tax-Sheltered Retirement Accounts: Can Financial Education Improve Decisions?

M. Martin Boyer; Philippe d'Astous; Pierre-Carl Michaud

doi:10.3386/w26128

Tax-Sheltered Retirement Accounts: Can Financial Education Improve Decisions?

M. Martin Boyer, Philippe d'Astous & Pierre-Carl Michaud

Working Paper 26128

DOI 10.3386/w26128

Issue Date July 2019

We conduct a stated-choice experiment to analyze the decision to contribute to front- or back-loaded tax-sheltered savings accounts. Our experimental design includes a randomized financial education treatment that provides information on these accounts. We assess whether respondents learn about the tax implications of these accounts and make contribution choices that increase after-tax income when exposed to the intervention. We find that our intervention improves both the understanding of the tax implications of the savings accounts (an increase of 6 to 15 percent) and contribution decisions. We find effects on after-tax lifetime-income for respondents by up to $1,900 per scenario presented.

We thank Morten Lau, Steeve Marchand, Derek Messacar and Lanny Zrill for comments and suggestions. We thank seminar participants at the 2019 Center for Financial Planning Colloquium, the 2019 Canadian Economics Association Meetings, the 2019 CEAR Administrative Records and Experiments Workshop, the 2019 Cherry Blossom Financial Literacy Workshop, and ETEPP-Aussois. We would like to thank David Boisclair for leading the development of the survey instrument and Aurelie Cote-Sergent for research assistance. We also acknowledge support from the Retirement and Saving Institute at HEC Montréal for funding the experiment. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
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Tax-Sheltered Retirement Accounts: Can Financial Education Improve Decisions?

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