fbpx Present Bias Causes and Then Dissipates Auto-Enrollment Savings Effects - John Beshears and David Laibson | Harvard Kennedy School

Additional Authors:

  • John BeShears
  • David Laibson


2022, Paper: "Auto features in defined contribution pension plans, like auto-enrollment, have a large shortrun effect on participation and contribution rates (Madrian and Shea 2001). However, a growing literature finds that auto features may have only a modest average impact in the long run.1 In this paper, we show that if households have present bias,2 auto-enrollment is predicted to have a positive causal impact on savings in the defined contribution savings plan at the household’s current employer. However, with sufficient present bias, the positive effect on current/proximate savings will be partially or even fully dissipated before retirement."

Non-HKS Author Websites -  John Beshears and David Laibson