Nudge: Improving Decisions about Health, Wealth, and Happiness

Commentary by John C Goodman

As of January of this year, U.S. employers can automatically enroll their employees in 401(k) plans with diversified portfolios- without fear of lawsuits and without certain regulatory burdens. Automatic enrollment should increase participation by about one-third, and diversification should produce larger and safer returns, although employees are able to opt out of both decisions. In the future, roughly one of every two 401(k) enrollees is likely to be so enrolled.

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