The Power of Suggestion¶
Madrian, B. C., & Shea, D. F. (2001). The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior. Quarterly Journal of Economics, 116(4), 1149-1187.
Cited by¶
3 citations across 3 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Mandatory vs. Default Norms
- Madrian and Shea (2001) documented this empirically in their landmark "power of suggestion" study, showing that switching a 401(k) plan from opt-in to opt-out enrollment raised participation rates from roughly 49% to over 86% while concentrating contributors at the default contribution rate and asset allocation; Johnson and Goldstein (2003) found analogous effects for organ-donation consent, where presumed-consent (opt-out) countries exhibited effective consent rates above 85% while opt-in countries clustered below 30%.
This sourceLandmark empirical study showing that switching 401(k) plans from opt-in to opt-out enrollment raised participation from ~49% to over 86% and concentrated contributors at the default contribution rate and asset allocation—canonical evidence of default-rule power.
- Madrian and Shea (2001) documented this empirically in their landmark "power of suggestion" study, showing that switching a 401(k) plan from opt-in to opt-out enrollment raised participation rates from roughly 49% to over 86% while concentrating contributors at the default contribution rate and asset allocation; Johnson and Goldstein (2003) found analogous effects for organ-donation consent, where presumed-consent (opt-out) countries exhibited effective consent rates above 85% while opt-in countries clustered below 30%.
- Substrate-Cued Behavior Recruitment
- Retirement-savings default enrollment is the pattern in its most analyzed, near-experimental form — the canonical case from choice architecture.
This sourceShows that switching the default from opt-in to automatic enrollment sharply raises participation with no change in economic terms — the canonical demonstration that a default (substrate) recruits the behavior and the attribution belongs to the default, not the population.
- Retirement-savings default enrollment is the pattern in its most analyzed, near-experimental form — the canonical case from choice architecture.
Domain-specific¶
- Default Effect
- Madrian and Shea (2001) found that switching 401(k) enrollment from opt-in to opt-out raised participation at a single firm from 37% among comparable-tenure hires before the change to 86% among those hired after it
This sourceThe single-firm automatic-enrolment result: 401(k) participation of 37% among comparable-tenure hires under affirmative enrolment against 86% among those hired after the default was switched on, the plan's terms otherwise unchanged.
- Madrian and Shea (2001) found that switching 401(k) enrollment from opt-in to opt-out raised participation at a single firm from 37% among comparable-tenure hires before the change to 86% among those hired after it
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