Defaults often have a large influence on consumer decisions. We identify an overlooked but practical alternative to defaults: requiring individuals to make explicit choices for themselves. We study such "active decisions" in the context of 401(k) saving. We find that compelling new hires to make...

We evaluate why individuals invest in high-fee index funds. In our experiments, subjects each allocate $10,000 across four S&P 500 index funds and are rewarded for their portfolio's subsequent return. Subjects overwhelmingly fail to minimize fees. We reject the hypothesis that subjects buy...

The National Retirement Risk Index measures the share of American households who are ‘at risk’ of being unable to maintain their pre-retirement stan­dard of living in retirement. The Index results from comparing households’ projected replacement rates – retirement income as a percent of...

Laboratory and field studies of time preference find that discount rates are much greater in the short-run than in the long-run. Hyperbolic discount functions capture this property. This paper presents simulations of the savings and asset allocation choices of households with hyperbolic...

The collapse of Enron, WorldCom, and Global Crossing wiped out much of their employees’ 401(k) savings, which had been heavily invested in employer stock. In response, bills have been proposed in Congress that would give employees the right to sell the employer stock in their 401(k), or that...