Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan

By Joshua Blumenstock, Michael Callen, Tarek Ghani. The American Economic Review, 2018

116 citations recorded by the source corpus.

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. (JEL C93, D14, D91, O12)

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/e649941fd2244886a2b1eb8dc395a1f9c5c8ddca

Citations in the corpus

• Nudging for Tax Compliance: A Meta-Analysis (2019, unknown): “For work that allows for both intensive and extensive margin responses to taxes, see, Blundell and MaCurdy (1999) and Kleven and Kreiner (2006) in the context of labor supply responses, and Almunia et al.”