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American Economic Review Vol. 108 No. 10 2018

Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan

Joshua Blumenstock1; Michael Callen2; Tarek Ghani3

1 School of Information, University of California at Berkeley, 102 South Hall, Berkeley, CA 94720 (email: ) · 2 Rady School of Management, University of California at San Diego, Wells Fargo Hall, 4W104, 9500 Gilman Drive, La Jolla, CA 92093 (email: ) · 3 Olin Business School, Washington University in St. Louis, Snow Way, 1 Brookings Drive, St. Louis, MO 63130 (email: )

open access

Abstract

We report on an experiment examining why default options impact behavior. By randomly assigning employees to different varieties of a salary-linked savings account, we find that default enrollment increases participation by 40 percentage points—an effect equivalent to providing a 50 percent matching incentive. We then use a series of experimental interventions to differentiate between explanations for the default effect, which we conclude is driven largely by present-biased preferences and the cognitive cost of thinking through different savings scenarios. Default assignment also changes employees’ attitudes toward saving, and makes them more likely to actively decide to save after the study concludes.

DOI
10.1257/aer.20171676
Volume
108
Issue
10
Pages
2868-2901
Language
en
Sources
openalex crossref bibtex:phds-export.bib

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