RAND Behavioral Finance Webinar

Informative or Misleading? The Social Security Statement's Effects on Program Participation and Employment

by Philip Armour

In the mid-1990s, the Social Security Administration started automatically mailing personalized Statements with information on projected retirement benefits, coverage for disability benefits, and survivors' benefits. This video talk provides an overview of how information interventions like the Statement can affect behavior. Using a staggered introduction of the Statement to measure its effect on participation in Social Security programs as well as employment decisions, the discussed study showed that individual reactions were striking and varied: receipt of the Statement nearly doubled the likelihood of applying for Social Security Disability Insurance, but only among those already reporting a serious health condition. Although it did not have an effect on the claiming decision of Social Security retirement benefits, Statement receipt led to large changes in hours worked among older workers, with this latter effect appearing to be driven by a misunderstanding of the assumptions behind the Statement's projections.

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