Macroeconomics and Individual Decisionmaking.

• Position: National Bureau of Economic Research's program

The NBER's Working Group on Macroeconomics and Individual Decisionmaking met in Cambridge on November 1. George A. Akerlof, University of California, Berkeley, and Robert J. Shiller, NBER and Yale University, organized this program:

James J. Choi, Harvard University; David Laibson, NBER and Harvard University; Brigitte C. Madrian, NBER and University of Chicago; and Andrew Metrick, NBER and University of Pennsylvania, "Active Decisions: A Natural Experiment in Savings" Discussant: Annamaria Lusardi, Dartmouth College

Alberto Alesina, NBER and Harvard University, and George-Marios Angeletos, NBER and MIT, "Fairness and Redistribution: U.S. versus Europe" Discussant: Roland Benabou, NBER and Princeton University

N. Gregory Mankiw, Council of Economic Advisers (on leave from NBER and Harvard University); Ricardo Reis, Harvard University; and Justin Wolfers, NBER and Stanford University, "Disagreement about Inflation Expectations" (NBER Working Paper No. 9796) Discussant: Stephen Cecchetti, NBER and Brandeis University

Xavier Gabaix, NBER and MIT, and David Laibson, "Industrial Organization with Boundedly Rational Consumers" Discussant: Barry Nalebuff, Yale University

Robert S. Chirinko, Emory University, and Huntley Schaller, Carleton University, "Glamour versus Value: The Real Story" Discussant: Jason Cummins, Federal Reserve Board

Rafael Di Tella, Harvard University, and Robert MacCulloch, Princeton University, "Why Doesn't Capitalism Flow to Poor Countries?" Discussant: Simeon Djankov, World Bank

Decisionmakers overwhelmingly tend to accept default options. In this paper, Choi and his co-authors identify an overlooked but practical alternative to defaults. They analyze the experience of a company that required its employees to affirmatively elect to enroll or not enroll in the company's 401(k) plan. Employees were told that they had to actively make a choice, one way or the other, with no default option. This "active decision" regime provides a neutral middle ground that avoids the paternalism of a one-size-fits-all default election. The active decision approach to 401(k) enrollment yields participation rates that are up to 25 percentage points higher than those under a regime with the standard default of non-enrollment. Requiring employees to make an active 401(k) election also raises average saving rates and asset accumulation with no increase in the rate of attrition from the 401 (k) plan.

Different beliefs about how fair social...