Borrowing to Save? The Impact of Automatic Enrollment on Debt / John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian, William L. Skimmyhorn.

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Beshears, John

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w25876.Publication details: Cambridge, Mass. National Bureau of Economic Research 2019.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: Does automatic enrollment into a retirement plan increase 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 enrollment causes no significant change in credit scores (point estimate 0.001 standard deviations) or debt balances excluding auto loans and first mortgages (point estimate -0.6% of annual salary). We also find no significant increase in auto loan and first mortgage balances in our main regression specification, although the estimated increases in these categories are economically and statistically significant in alternative specifications.

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Previous	nber w25873 Information, Mobile Communication, and Referral Effects /	nber w25874 Demographic Origins of the Startup Deficit /	nber w25875 The Gift of Global Talent: Innovation Policy and the Economy /	nber w25876 Borrowing to Save? The Impact of Automatic Enrollment on Debt /	nber w25877 On the Equivalence of Private and Public Money /	nber w25878 Excessive Entry and Exit in Export Markets /	nber w25879 The Indeterminacy School in Macroeconomics /	Next

May 2019.

Does automatic enrollment into a retirement plan increase 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 enrollment causes no significant change in credit scores (point estimate 0.001 standard deviations) or debt balances excluding auto loans and first mortgages (point estimate -0.6% of annual salary). We also find no significant increase in auto loan and first mortgage balances in our main regression specification, although the estimated increases in these categories are economically and statistically significant in alternative specifications.