Default as advice? A survey experiment on preselecting pension choices and the Endorsement effect

One of the most prominent aspects of choice architecture is the selection of a default option, for instance by preselecting an option in an online form. To understand what is driving the effect of a preselection nudge, we conducted an online experiment in the (Dutch) pension context (N=1.076). Respondents made hypothetical decisions regarding their pension funds’ sustainable investment and interest risk policies. Preselecting an option had large effects on what respondents chose (19-28 percentage-points from a 45% to 50% baseline). The same preselection nudge without an implicit advice-component still had substantial effects (11-22 percentage points). The preselection nudge without the implicit advice-component was always less potent compared to the regular preselection nudge, but this difference was not statistically significant. This indicates that the effect of the preselection nudge in this survey experiment is driven, at least in part, by people’s tendency to follow the path of least resistance. The effects of a preselection nudge seemed more pronounced for respondents scoring low on financial literacy. In designing choice environments in the Dutch pension system, providers should incorporate  behavioral insights on the effects of defaults and other nudges, as well as on the mechanisms driving these effects.