The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
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Search results: 3.
Reinforcement Learning and Savings Behavior
Published: 11/25/2009 | DOI: 10.1111/j.1540-6261.2009.01509.x
JAMES J. CHOI, DAVID LAIBSON, BRIGITTE C. MADRIAN, ANDREW METRICK
We show that individual investors over‐extrapolate from their personal experience when making savings decisions. Investors who experience particularly rewarding outcomes from 401(k) saving—a high average and/or low variance return—increase their 401(k) savings rate more than investors who have less rewarding experiences. This finding is not driven by aggregate time‐series shocks, income effects, rational learning about investing skill, investor fixed effects, or time‐varying investor‐level heterogeneity that is correlated with portfolio allocations to stock, bond, and cash asset classes. We discuss implications for the equity premium puzzle and interventions aimed at improving household financial outcomes.
The Effect of Providing Peer Information on Retirement Savings Decisions
Published: 02/24/2015 | DOI: 10.1111/jofi.12258
JOHN BESHEARS, JAMES J. CHOI, DAVID LAIBSON, BRIGITTE C. MADRIAN, KATHERINE L. MILKMAN
Using a field experiment in a 401(k) plan, we measure the effect of disseminating information about peer behavior on savings. Low‐saving employees received simplified plan enrollment or contribution increase forms. A randomized subset of forms stated the fraction of age‐matched coworkers participating in the plan or age‐matched participants contributing at least 6% of pay to the plan. We document an oppositional reaction: the presence of peer information decreased the savings of nonparticipants who were ineligible for 401(k) automatic enrollment, and higher observed peer savings rates also decreased savings. Discouragement from upward social comparisons seems to drive this reaction.
Borrowing to Save? The Impact of Automatic Enrollment on Debt
Published: 07/19/2021 | DOI: 10.1111/jofi.13069
JOHN BESHEARS, JAMES J. CHOI, DAVID LAIBSON, BRIGITTE C. MADRIAN, WILLIAM L. SKIMMYHORN
Does automatic enrollment into a retirement plan increase financial distress due to increased borrowing outside the plan? We study a natural experiment created when the U.S. Army began automatically enrolling newly hired civilian employees into the Thrift Savings Plan. Four years after hire, automatic enrollmentincreases cumulative contributions to the plan by 4.1% of annual salary, but we find little evidence ofincreased financial distress. Automatic enrollment causes no significant change in credit scores, debt balances excluding auto debt and first mortgages, or adverse credit outcomes, with the possible exception of increasedfirst‐mortgage balances in foreclosure.