STUDY | 
Finance
 BEHAVIOR CHANGE

Incorporating Employee Heterogeneity Into Default Rules for Retirement Plan Selection.

Goda (2010)
Summary by 
Mark Egan

The authors studied the UK Winter Fuel Payment (WFP), a cash transfer to households aged over 60. The WFP can range from £100-£300 and is usually given in November / December. Standard economic theory implies that the labelling of cash transfers or cash-equivalents (e.g. child benefits, food stamps) should have no effect on spending patterns but this is not the case here. Exploiting sharp eligibility criteria in a regression discontinuity design, the authors found evidence of a behavioural effect of the labelling. If households were given an unconditional, neutrallynamed cash transfer of £100, they would be expected to spend £3 of it on fuel. If it is called Winter Fuel Payment, they spend an average of £41 on fuel.