Large Fund Assortments Reduce Participation Among Women

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1 The current issue and full text archive of this journal is available at Fund assortments, gender, and retirement plan participation Maureen Morrin Rutgers University School of Business, Camden, New Jersey, USA Susan Broniarczyk University of Texas at Austin, Austin, Texas, USA, and J. Jeffrey Inman University of Pittsburgh, Pittsburgh, Pennsylvania, USA Retirement plan participation 433 Received May 2010 Revised July 2010 Accepted January 2011 Abstract Purpose This paper seeks to promote an understanding of gender effects on retirement plan participation as a function of fund assortment size. Design/methodology/approach A decision simulation was conducted among 349 US adults whose task was to invest in a hypothetical 401(k) retirement plan. The number of mutual funds offered for investment was varied and the effects on the incidence and extent of participation observed. Findings The results indicate that larger fund assortments tend to reduce participation among women, but increase it among men. Research limitations/implications Replication in other contexts and with other data sets would be worthwhile. Practical implications To enhance retirement plan adoption/participation, financial service firms may want to tailor such plans according to gender (and other consumer characteristics) according to the present set of findings. Originality/value First time authors are aware that the interaction between gender and assortment size is examined. Keywords Retirement, Consumer, Gender, Assortment, Participation, Investor Paper type Research paper 1. Introduction Employers in the USA continue to transition from offering their employees traditional pension plans, which require little or no decision-making on the part of the individual, to defined contribution plans such as 401(k) s, as employees primary retirement savings vehicle. Similar shifts are evident in other parts of the world as well, as part of pension reform efforts. In the process, individuals are required to take on more responsibility for their future financial security, having to decide whether or not to participate in such plans, how much money to invest, and how safe or risky those investments should be. For many, such decisions are difficult, even daunting. In one recent survey, less than one fifth of respondents believed they were successfully planning for retirement (Lusardi and Mitchell, 2005). Not surprisingly, despite the importance of saving for retirement, many choose not to do so. Consumer responses The authors gratefully acknowledge generous financial support for this project from a grant by the FINRA (formerly NASD) Investor Education Foundation (# ). International Journal of Bank Marketing Vol. 29 No. 5, 2011 pp q Emerald Group Publishing Limited DOI /

2 IJBM 29,5 434 such as this can represent a significant problem for financial services firms interested in encouraging consumer adoption of retirement investment products. Part of the problem may stem from consumers inadequate knowledge in the domain of financial investing (Morrin et al., 2008) or low levels of financial literacy (Rotfeld, 2008) a problem particularly evident among women, minorities, and those without a college education (Lusardi and Mitchell, 2005). Another part of the problem may stem from the decision making context, such as how defined contribution plans are structured. For example, efforts have grown in recent years to encourage individuals to participate in defined contribution retirement plans by revamping the sign-up procedure. More employers now offer automatic enrollment or automatic savings increases in their 401(k) plans (Kristof, 2007; Madrian and Shea, 2001; Thaler and Benartzi, 2004). Making enrollment in a firm s retirement plan the default option has indeed enhanced the level of employee participation (Kristof, 2007). Nevertheless, the majority of defined contribution plans continue to be structured as opt-in, and a significant proportion of individuals eligible to participate in such plans choose not to do so. In the USA it is not uncommon for new employees to sign up for 401(k) plans with little to no knowledge and experience regarding how to choose from the assortment of investments. A large-scale study conducted among over 2 million employees by the human resources consulting firm Hewitt Associates, for example, found that about a third of those eligible to participate in employers 401(k) retirement plans chose not to do so ( html). Thus, it is of critical importance to better understand the process underlying an individual s decision to invest in a retirement investment plan (Wiener and Doescher, 2008). Other aspects of a 401(k) plan s structure can impact the decision process. Research has shown that offering larger mutual fund assortments in defined contribution plans reduces overall participation rates. Iyengar et al. (2004) examined data provided by Vanguard on over 700,000 employees eligible for 401(k) plans. They found that, controlling for factors such as compensation, gender, and age, every ten funds added to the fund assortment in a 401(k) plan led to a 1.5 percent to 2.0 percent drop in participation. When only two funds were offered in a plan, the average participation rate was 75 percent, compared to just 60 percent if there were 59 funds offered in the plan. 1.1 Gender effects We seek to extend this seminal line of research by exploring gender as a moderator of fund assortment effects on participation in 401(k) plans. The key question we address in the current research is: Compared to men, are women more likely to be negatively impacted by larger fund assortment sizes in terms of plan participation? Women s responsibilities for financial decision-making are growing due to a number of converging trends including longer female versus male life spans, an increasing number of female heads of households, and a delay in the mean age of marriage. As women take on increased responsibility for financial decision making (Enright, 2006), understanding gender effects in this domain takes on increased importance. Prior research examining gender differences in investment decision making has shown that women tend to be more risk averse than are men in this domain (see Byrnes et al., 1999 for a meta-analysis). Women have been found to allocate their investments more conservatively when investing for retirement in the USA (Arano et al., 2010) and Australia (Rosenman and Scott, 2009), and when investing more generally in both the

3 USA and Spain (Frijns et al., 2008; Zinkhan and Karande, 1991). Even among financial experts, such as mutual fund managers, women exhibit greater risk aversion than do men (Beckmann and Menkhoff, 2008). Some have suggested the gender difference in risk tolerance may be due to differences in testosterone levels (Sapienza et al., 2009), whereas others argue that it is related to differences in decision making confidence (Estes and Hosseini, 1988, see also Goldsmith and Goldsmith, 1997; see Dietz et al., 2003). More recent research has shown that gender effects on decision-making outcomes can be attributed due to differences in agentic orientation (Bakan, 1966; Iacobucci and Ostrum, 1993; Meyers-Levy, 1988; Moskowitz et al. 1994). More specifically, men have been found to be more sensitive to the achievement of gains, and thus are more risk taking when making financial investments a decision making domain in which they feel highly capable (He et al., 2007). This difference may help to explain men s overconfidence and excessive stock trading tendencies (Barber and Odean, 2001). Women, in contrast, due to their communion orientation, are more sensitive to the avoidance of losses, and thus are more risk averse when making financial investment decisions a domain in which they tend to feel less capable (He et al., 2007). In the current research, we expect that when faced with a larger assortment of mutual funds from which to choose, that is, a more complex and potentially daunting investment task, men will interpret the larger assortment as an opportunity for greater financial gains and respond in an approach manner. Women, on the other hand, will perceive the larger assortment as an opportunity for greater losses and respond in an avoidant manner. Larger assortments will be seen by men in terms of their upside potential, and by women in terms of their downside potential (Mittal et al., 2002). As a result, men will respond to larger fund assortments with greater participation levels, and women with lesser participation levels. Below we report the empirical results of a decision simulation among a convenience sample of respondents that explores the effects of fund assortment size on the incidence and extent of participation by gender. Prior research has similarly utilized decision simulations that experimentally alter plan structure to investigate investor choice outcomes and the effects of individual difference variables on these outcomes (e.g. Frijns et al., 2008; Morrin et al., 2008). We manipulate the number of funds offered in the plan and observe the effects on women s and men s decisions to participate. We find, in accord with our prediction that women, but not men, are negatively impacted by larger fund assortments in terms of the decision to participate. We also find that among those who decide to participate, a large fund assortment causes women to invest less money than men do in the plan. We describe the study next, and then conclude with implications, limitations, and ideas for future research. Retirement plan participation Method 2.1 Sample A sample of 349 adults was obtained by contacting the members of several non-profit organizations, as well as by approaching faculty, students and staff of a major state university in a campus center (see sample characteristics in Table I). A total of 48 percent were women, and respondents reported a mean household income just above $50,000; 55 percent of the respondents were employed, and 34 percent were students. Of the participants, 60 percent reported having money currently invested in a 401(k) plan. We checked for gender differences in our sample in terms of age, income, employment status, having money invested in a 401k plan, and native speaker of English, none of

4 IJBM 29,5 436 Table I. Sample characteristics Have money invested in a 401k type of plan? Yes 60 No 40 Employment status Full-time 30 Part-time 25 Seeking work 6 Retired 3 Student 34 Stay at home parent 2 Gender Female 48 Male 52 Age Household income $0-$25, $25,001-$50, $50,001-$75, $75,001-$100, Over $100, Native speaker of English? Yes 90 No 10 Note: n ¼ 349 (%) which were significant (all p s. 0:10). We included both students and those without experience investing in 401(k) plans, because many new employees have limited knowledge or experience with such plans when the time comes to make their initial investments. Initial investment decisions in a retirement portfolio are particularly important because investors often exhibit decision inertia after their initial allocation decisions (Ameriks and Zeldes, 2000; Samuelson and Zeckhauser, 1988). Participation was obtained by offering a $5 donation to the non-profit organization or direct payment to the individual for completion of a questionnaire on retirement investing, which generally took about 15 to 20 minutes to complete. 2.2 Design The study consisted of a single factor (fund assortment size: small, medium, large) between-subjects design (Frijns et al., 2008; Morrin et al., 2008). Assortment size was

5 manipulated such that the 401(k) plan offered 3, 9, or 21 mutual funds for investment (i.e. a small, medium, or large fund assortment). Research suggests that as of 2001, the majority of 401(k) plans in existence in the USA offered from 3 to 9 options for investment (Elton et al., 2006), so we wanted to encompass at least this range in our study. In Benarzti and Thaler s (2001) analysis of a database containing 1.56 million 401(k) investors, they reported the average number of funds offered in the 401(k) plans as 6.8, with a range from 1 to 21 funds offered. In Huberman and Jiang s (2006) more recent analysis of over half a million participants in 401k plans, they report a range of plans offering from 4 to 59 funds, with the vast majority offering 22 or fewer, and the mean number of funds offered across all plans of Given this backdrop, we chose to offer 3, 9, or 21 funds in our study. We realize of course, that these choice sets may not reflect the size of fund offerings made available to workers in other countries. For example, in Sweden, workers can choose from as many as 600 mutual funds for investment (Hedesstrom et al., 2007). However, we felt these were the appropriate fund assortments sizes for the sample in this study. The funds were listed in alphabetical order. In all conditions we included funds reflecting the three major asset classes that are typically included in defined contribution plans in the USA: stock funds, bond funds, and money market funds (Huberman and Jiang, 2006). We maintained an equal split among the number of stock funds (one-third of total), bond funds (one-third of total) and money market funds (one-third of total) offered in each of the conditions. In the small assortment condition, each of the three asset classes offered a single fund for investment (one stock fund, one bond fund, and one money market fund). In the medium assortment condition, each of the asset classes offered three funds for investment. In the large assortment condition, each of the asset classes offered seven funds for investment (see the Appendix, Table AI). In all conditions we included an S&P 500 fund, which is the most commonly available fund offered in defined contribution plans in the USA, as well as a bond fund and a money market fund, which are also commonly offered in such plans (Huberman and Jiang, 2006). Retirement plan participation Procedure Each respondent received a booklet that asked him/her to imagine that she/he was an employee of a firm that offered the opportunity to invest in a 401(k) plan. Respondents were exposed to information describing the plan, including descriptions about each of the funds offered for investment (e.g. investing style, historical returns, etc). The fund descriptions were based on actual funds available at Vanguard, although Vanguard-specific brand-identifying information was removed from the stimuli. Respondents reviewed the plan information and then decided whether they would invest in the plan (yes or no). Plan participants also decided how much they would invest in the plan ($) and completed several closed-ended items. 2.4 Other measures Because some prior research has found gender differences in risk propensity (Appicella et al., 2008; Jianakopolos and Bernasek, 1998; Hinz et al., 1997; Sunden and Surette, 1998), we included an item to assess risk aversion. Respondents indicated the extent to which they agreed with the statement: I like to avoid risk, even if it means getting a lower return (on a scale from 1 ¼ Strongly Disagree to 7 ¼ Strongly agree). To capture differences in agentic orientation, we included this item: I will feel personally

6 IJBM 29,5 438 responsible for how well this investment performs, to which respondents indicated their agreement on a scale of 1 ¼ Strongly disagree to 7 ¼ Strongly agree. We also measured an aspect of respondents levels of financial literacy with an item designed to assess perceived knowledge of investing. While this item does not tap into all the facets of financial literacy, it allows us to assess whether women perceive themselves as less knowledgeable than men in the area of financial investing. On a scale of 1 ¼ Strongly disagree to 7 ¼ Strongly agree, respondents indicated the degree to which they agreed with the statement: Compared to most people, I know a lot about investing. Respondents also completed several demographic questions. 3. Results 3.1 Plan participation In this study our primary interest was in how mutual fund assortment size affects the likelihood of participation in a 401(k) plan. We first measure participation in terms of incidence, that is, on the basis of the individuals decisions regarding whether or not to participate in the plan. Of the 349 respondents, 249 or 71.3 percent chose to participate. This level of participation is on par with that reported in analyses of actual benefit plan data (e.g. a 71 percent average participation rate reported by Huberman et al., 2007). We conducted a binary logistic regression on participation (yes/no) as a function of fund assortment size, gender, and all possible interactions, with covariates included for age, household income, risk aversion and self-reported knowledge (Table II). Fund assortment size was coded as a dummy variable, so as not to assume a linear relationship between participation and assortment size. Thus, the baseline was small assortment size, with dummy variables included for the medium (1/0) and large assortment sizes (1/0). Neither risk aversion (p. 0:30) nor self-reported knowledge (p. 0:60) were significant, and are not discussed further. Participation in the plan increased as a function of income and age, however. As might be expected, wealthier and older respondents were more likely to participate. Women were also slightly more likely to invest than were men (71.6 percent versus 71.1 percent, Wald ð1þ ¼8:26, p, 0:005), a result that echoes prior research showing slightly higher female participation rates in 401(k) s (Huberman et al., 2003). We find that this aggregate result, however, is the net B s.e. Wald df Sig. Exp(B) Table II. Logistic regression results for plan participation incidence Significant variables Medium Asst Size Large Asst Size Gender a Gender X Medium Asst Size Gender X Large Asst Size Household income Age Insignificant variables Risk aversion Knowledge of investing Constant Note: a Gender coding 0 ¼ female; 1 ¼ male

7 result of women being more likely than men to participate only in the small assortment condition; women are less likely to participate in the larger fund assortment conditions (described in more detail below). As expected, overall participation declined when larger fund assortments were offered for investment (medium assortment size: Wald ð1þ ¼6:48, p, 0:05; large assortment size: Wald ð1þ ¼8:11, p, 0:005). Total participation fell from 73.5 percent in the small assortment condition to 70.8 percent in the large assortment condition This result, about a three point drop with the addition of 18 funds to the assortment, is on par with the patterns noted by Iyengar et al. (2004). These main effects are qualified by the interactions between gender and assortment size (gender by medium assortment size: Wald ð1þ ¼7:38, p, 0:01; gender by large assortment size: Wald ð1þ ¼11:02, p, 0:001). In support of our predictions, the negative effects of the larger fund assortments were evident for women but not for men. Women s participation in the plan fell as fund assortment increased, from 86.0 percent when choosing from the small assortment condition to 66.1 percent when choosing from the medium assortment condition (Chi-square ð1þ ¼6:148, p, 0:05), and to 62.5 percent when choosing from the large assortment condition (Chi-square ð1þ ¼8:15, p, 0:01). The difference between the medium and large assortment conditions was not significant (Chi-square ð1þ ¼0:15, p. 0:65; see Figure 1). Men s participation, on the other hand, did not fall as fund assortment size increased. In fact, men s participation rates rose from 60.7 percent in the small fund assortment size to 78.1 percent in the large fund assortment size (Chi-square ð1þ ¼4:311, p, 0:05). The differences between the small (60.7 percent) and medium (73.3 percent) assortment sizes (Chi-square ð1þ ¼2:094, p. 0:10) and medium (73.3 percent) and large (78.1 percent) assortment sizes (Chi-square ð1þ ¼0:38, p. 0:50) were not significant. In terms of comparing participation rates between men and women by fund assortment size, a significantly larger proportion of women participated in the plan than men when a small assortment was offered (86.0 percent versus 60.7 percent, Chi-Square Retirement plan participation 439 Figure 1. Mean plan participation incidence as a function of gender and fund assortment

8 IJBM 29,5 440 ð1þ ¼9:24, p, 0:005); there was no difference when a medium assortment was offered (66.1 percent versus 73.3 percent, Chi-Square ð1þ ¼0:72, p. 0:35); and a directionally smaller proportion of women invested in the plan than men when a large assortment was offered (62.5 percent versus 78.1 percent, Chi-Square ð1þ ¼3:53, p, 0:10). 3.2 Dollars invested in the plan We next measured participation in terms of the extent of monetary investment in the plan among those who chose to participate. We conducted a stepwise regression on dollars invested as a function of fund assortment size (dummy coded, as described previously), gender, and all possible interactions, with covariates included for age, household income, risk aversion and self-reported knowledge (Table III). The only significant effect was the interaction of gender with large assortment size (t ¼ 2:20, p, 0:05). When choosing from the small fund assortment, the amount invested by men ($7,465) and women ($7,555) did not differ (p. 0:90). Similarly, when choosing from the medium fund assortment, the amount invested by men ($7,404) and women ($6,861) did not differ (p. 0:50). However, when choosing from the large fund assortment, the amount invested by men ($8,549) was greater than that invested by women ($6,830; p, 0:05; see Figure 2; Note: the differences within gender were not significant; the means reported are covariate-adjusted). Thus, we see that among those who chose to participate in the plan, the large fund assortment size created a discrepancy in the participation of women relative to men, as measured by dollar investment level. 3.3 Knowledge, risk propensity, and agentic orientation In accord with prior research (e.g. Lusardi and Mitchell, 2005), we found that women reported being less knowledgeable about investing (M ¼ 3:04) than men (M ¼ 4:02, t ð347þ ¼5:24, p, 0:0001). However, we did not find any differences between women s (M ¼ 4:15) and men s (4.23) risk aversion levels based on the single-item measure we included (t ð347þ ¼20:43, p. 0:65). We felt this anomalous result may have been due to the fact that it was a single-item (versus multiple-item) self-report measure. Thus, we also measured risk propensity behaviorally in terms of participants asset allocation decisions, and, as described below, we find that women do B s.e. Beta t Sig. Table III. Regression results for dollars invested in the plan Significant variables Gender X Large Asst Size $1, $ Constant $7, $ N/A Insignificant variables Medium Asst Size N/A N/A Large Asst Size N/A N/A Gender a N/A N/A Gender X Medium Asst Size N/A N/A Risk aversion N/A N/A Knowledge of investing N/A N/A Household income N/A N/A Age N/A N/A Note: a Gender coding 0 ¼ female; 1 ¼ male

9 Retirement plan participation 441 Figure 2. Mean dollars invested by participants as a function of gender and fund assortment indeed exhibit greater risk aversion than men, based on the proportion of dollars they invested in money market funds, the safest asset class offered in the plan. Thus, although our trait-based measure of risk propensity was not significant, we looked for more direct, domain-specific, behavioral evidence of differences in risk taking between men and women by examining the proportion of dollars invested in money market funds (i.e. cash). We assumed that the greater the amount invested in the money market funds, the greater the desire to avoid risk. We conducted a stepwise regression on the proportion of dollars invested in money market funds as a function of fund assortment size (dummy coded), gender, and all possible interactions, with covariates included for age, household income, risk aversion and self-reported knowledge (Table IV). The only significant effect was gender (t ¼ 22:65, p, 0:01). Women invested an average of 30.6 percent of their portfolio in money market funds, compared to 22.2 percent for men. This result suggests that women are indeed more risk-averse in the domain of financial investing, in accord with prior research and in support of our conceptual framework. We then analyzed agentic orientation in terms of felt responsibility for how well the investments would perform. We conducted a stepwise regression on response to the agentic question as a function of fund assortment size (dummy coded, as described previously), gender, and all possible interactions, with covariates included for age, household income, risk aversion and self-reported knowledge (Table V). The significant effects were risk propensity (t ¼ 2:93, p, 0:01; r ¼ 0:17), medium assortment size (t ¼ 3:07, p, 0:01; r ¼ 0:13), and the gender by large assortment size interaction (t ¼ 2:15, p, 0:05). Importantly, in terms of support for our theoretical framework, inspection of the means showed that personal responsibility for investment return did not differ significantly for women as a function of fund assortment size (Small assortment M ¼ 4:67, Medium assortment M ¼ 5:20, Large assortment M ¼ 4:60, ps for differences between all pairs of means.0.10). However, when choosing from the large or medium fund assortment, men felt greater responsibility for how well the investments would perform than when choosing from the small fund assortment (Small assortment

10 IJBM 29,5 442 Table IV. Regression results for proportion of dollars invested in money market B s.e. Beta t Sig. Significant variables Gender a Constant N/A Insignificant variables Medium Asst Size N/A N/A Large Asst Size N/A N/A Gender X Medium Asst Size N/A N/A Gender X Large Asst Size N/A N/A Risk aversion N/A N/A Knowledge of investing N/A N/A Household income N/A N/A Age N/A N/A Note: a Gender coding 0 ¼ female; 1 ¼ male B s.e. Beta t Sig. Table V. Regression results for agentic orientation Significant variables Gender X Large Asst Size Medium Asst Size Risk aversion Constant N/A Insignificant variables Large Asst Size N/A N/A Gender X Medium Asst Size N/A N/A Gender a N/A N/A Risk aversion N/A N/A Knowledge of investing N/A N/A Household income N/A N/A Age N/A N/A Note: a Gender coding 0 ¼ female; 1 ¼ male M ¼ 4:19 versus Medium assortment M ¼ 5:16, p, 0:01; Large assortment M ¼ 5:02, p, 0:05 versus small assortment). This result supports our general hypothesis, wherein men seem to interpret larger assortments as opportunities for greater financial gains and respond in more of an approach manner, feeling a greater level of agentic power or ability to determine investment outcomes. 4. Discussion The results reported here show that individual difference factors, such as gender, and contextual or plan structure factors, such as number of mutual funds offered in a 401(k) plan, can interact to influence both the incidence and extent of participation in defined contribution retirement investment plans. Iyengar et al. (2004) found that participation rates declined by 1.5 percent to 2.0 percent for each ten additional fund added to the choice assortment in 401(k) plans. Here, we found that the reduced participation in retirement plans that can result from increased fund assortment size was moderated by

11 gender, with the negative effect of larger assortments on participation evident among women, but not among men, and we argue that this difference is driven by their different agentic orientations. We also measure participation in two ways: (1) incidence (i.e. yes/no); and (2) extent ($ conditional on participation). More specifically, we found that women were less likely to participate in the 401(k) when larger mutual fund assortments were offered. In contrast, the evidence suggests that men may be more likely to participate when larger assortments are offered. We also found that among those who decided to participate in the plan, the large fund assortment caused women to invest fewer dollars compared to men. Those responsible for formulating retirement plan structures should be aware of potential differences in plan participation based on gender. We found that women reported being less knowledgeable than men, and their asset allocations suggested they are more risk averse in this domain. Men, but not women, felt more responsibility for the outcome of their investments as fund assortment size increased, suggesting a stronger agentic orientation as a function of choice set size. These findings help to explain why men may exhibit approach behavior and women avoidant behavior in the face of larger fund assortments. These results have implications for pension reform efforts and shifts away from defined benefit and toward defined contributions plans that are under consideration or in process in various parts of the world such as Latin America (e.g. Calvo et al., 2010), New Zealand (Rashbrooke, 2009), Australia (Barrett and Tseng, 2008), Canada (Baldwin, 2008), Europe (Sloss and Russell, 1992), South America (d Elia, 2009), Asia (Lu et al., 2008; Williamson et al., 2009), Southeast Asia (Asher, 1998), and elsewhere (Dent and Sloss, 1996). More specifically, offering ever-larger sets of investment choices should be approached with caution in the case of women or, more broadly, investors who might respond in an avoidant manner due to lower agentic orientations. Larger fund assortments may reduce plan participation and dollar investment levels among those with lower agentic orientations. Our results are limited in that they are based on a single simulation study. Our findings need to be replicated in other samples and populations. For example, observational analysis of actual plan data would provide good supplementary evidence in support of our hypotheses. There may also be other individual difference variables that moderate these effects that are not examined in the present research. For instance, prior research has also shown that men and women differ in the way they process information with men tending to process information in a more heuristic or schema-based approach, whereas women tend to process information in a more detailed or piecemeal fashion (Meyers-Levy and Maheswaran, 1991; Iacobucci and Ostrum, 1993; Kempf et al., 2006; Meyers-Levy, 1989). Whether these processing style differences lead women to become more overwhelmed in the face of large assortment is an interesting avenue for further investigation. Future research should attempt to identify other segments of the population that may be subject to negative effects of larger fund assortments. Future research could also explore what other aspects of 401(k) plan structures have significant effects on participation as well as satisfaction. For example, certain types of decision aids, such as graphical displays (Kozup et al., 2008) could backfire for women, if they have the effect of increasing the amount of information processing required. This and other questions offer many fruitful areas for further exploration. Retirement plan participation 443

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14 IJBM 29,5 446 Mittal, V., Ross, W.T. Jr and Tsiros, M. (2002), The role of issue valence and issue capability in determining effort investment, Journal of Marketing Research, Vol. 39, November, pp Morrin, M., Broniarczyk, S., Inman, J.J. and Broussard, J. (2008), Saving for retirement: the effects of fund assortment size and investor knowledge on asset allocation strategies, Journal of Consumer Affairs, Vol. 42 No. 2, pp Moskowitz, D.S., Suh, E.J. and Desaulniers, J. (1994), Situational influences on gender differences in agency and communion, Journal of Personality & Social Psychology, Vol. 66 No. 4, pp Rashbrooke, G. (2009), Simple, effective, and (relatively) inexpensive: New Zealand retirement provision in the international context, Social Policy Journal of New Zealand, Vol. 36, pp Rosenman, L. and Scott, W. (2009), Financing old age: why is there still gender inequality?, Australian Social Work, Vol. 62 No. 2, pp Rotfeld, H. (2008), Financial aliteracy, Journal of Consumer Affairs, Vol. 42 No. 2, pp Samuelson, W. and Zeckhauser, R.J. (1988), Status quo bias in decision making, Journal of Risk and Uncertainty, Vol. 1, March, pp Sapienza, P., Zingales, L. and Maestripier, D. (2009), Gender differences in financial risk aversion and career choices are affected by testosterone, Proceedings of the National Academy of Sciences of the United States of America, Vol. 106 No. 36, pp Sloss, D. and Russell, R. (1992), EC pension plan investment: existing differences and opportunities after 1992, Benefits Quarterly, Vol. 8 No. 4, pp Sunden, A.E. and Surette, B.J. (1998), Gender differences in the allocation of assets in retirement savings plans, American Economic Review, Vol. 88 No. 2, pp Thaler, R. and Benartzi, S. (2004), Save more tomorrow: using behavioral economics to increase employee saving, Journal of Political Economy, Vol. 112 No. 1, part 2, pp. S Wiener, J. and Doescher, T. (2008), A framework for promoting retirement savings, Journal of Consumer Affairs, Vol. 42 No. 2, pp Williamson, J.B., Shen, C. and Yang, Y. (2009), Which pension model holds the most promise for China? A funded defined contribution scheme, a notional defined contribution scheme or a universal social pension?, The Journal of Poverty & Social Justice, Vol. 17 No. 2, pp Zinkhan, G.M. and Karande, K.W. (1991), Cultural and gender differences in risk-taking behavior among American and Spanish decision makers, Journal of Social Psychology, Vol. 131 No. 5, pp Further reading Botti, S. and Iyengar, S. (2006), The dark side of choice: when choice impairs social welfare, Journal of Public Policy & Marketing, Vol. 25 No. 1, pp Organization for Economic Cooperation and Development (2005), Improving Financial Literacy: Analysis of Issues and Policies, Organization for Economic Co-operation and Development, Paris. About the authors Maureen (Mimi) Morrin is Professor of Marketing at Rutgers University School of Business, Camden, New Jersey, USA. Maureen Morrin is the corresponding author and can be contacted at: mmorrin@rutgers.edu Susan Broniarczyk is Professor of Marketing at the University of Texas at Austin. J. Jeffrey Inman is the Albert Wesley Frey Professor of Marketing, University of Pittsburgh.

15 Appendix Average annual total returns (%) Fund name Fund objective One year Three years Ten years Small fund assortment (three funds) 500 Index Stock Fund The fund seeks to track the performance of a benchmark index that measures the investment return of large-capitalization stocks Federal Money Market Fund Invests primarily in short-term securities that are issued by US government agencies Long-Term Corporate Bond Fund Seeks current income by investing primarily in high-quality corporate bonds with an average maturity of 15 to 25 years. The fund s expense advantage allows it to pursue a higher level of income with less risk than comparable funds Medium fund assortment (nine funds) 500 Index Stock Fund The fund seeks to track the performance of a benchmark index that measures the investment return of large-capitalization stocks Explorer Stock Fund Seeks long-term capital growth by investing primarily in the stocks of smaller companies. This fund s advisers use both fundamental (company, industry, and economic research) and quantitative (computer modeling) analysis to select stocks that have significant growth potential based on the advisers judgments about companies financial prospects Federal Money Market Fund Invests primarily in short-term securities that are issued by US government agencies GNMA Bond Fund Seeks current income by investing primarily in Government National Mortgage Association ( Ginnie Mae ) securities, which are backed by the US government to provide timely payment of principal and interest (yield and share price are not guaranteed) International Growth Stock Fund Seeks long-term capital growth by investing in the stocks of foreign companies believed by its investment advisers to exhibit above-average growth potential. To maintain geographic diversity, the fund s advisers invest in a number of international stock markets; most investments are made in Europe and in the Pacific region. To discourage short-term trading, the fund assesses a 2.0% fee on redemptions of shares purchased on or after June 27, 2003, and held for less than two months. The fee is paid directly to the fund and therefore is not considered a load (continued) Retirement plan participation 447 Table AI. Small, medium and large fund assortments used in study

16 IJBM 29,5 448 Table AI. Average annual total returns (%) Fund name Fund objective One year Three years Ten years Long-Term Corporate Bond Fund Seeks current income by investing primarily in high-quality corporate bonds with an average maturity of 15 to 25 years. The fund s expense advantage allows it to pursue a higher level of income with less risk than comparable funds Prime Money Market Fund Invests in a combination of commercial paper, certificates of deposit, bankers acceptances, and US government securities. This fund typically offers the highest yield of our money market funds Short-Term Corporate Bond Fund Seeks current income by investing primarily in high-quality corporate bonds with an average maturity of 1 to 3 years. This fund s expense advantage allows it to pursue a higher level of income with less risk than comparable funds Tax-Exempt Money Market Fund Invests in high-quality municipal securities issued by state and local governments across the USA. This fund provides income that is exempt from federal tax Large fund assortment (21 funds) 500 Index Stock Fund The fund seeks to track the performance of a benchmark index that measures the investment return of large-capitalization stocks Admiral Treasury Money Market Fund Invests solely in direct government obligations, such as US Treasury bills and other short-term securities backed by the full faith and credit of the US government. This fund s expenses are low because of its high minimum investment Explorer Stock Fund Seeks long-term capital growth by investing primarily in the stocks of smaller companies. This fund s advisers use both fundamental (company, industry, and economic research) and quantitative (computer modeling) analysis to select stocks that have significant growth potential based on the advisers judgments about companies financial prospects Federal Money Market Fund Invests primarily in short-term securities that are issued by US government agencies GNMA Bond Fund Seeks current income by investing primarily in Government National Mortgage Association ( Ginnie Mae ) securities, which are backed by the US government to provide timely payment of principal and interest (yield and share price are not guaranteed) (continued)

17 Average annual total returns (%) Fund name Fund objective One year Three years Ten years Growth Equity Stock Fund Seeks long-term capital growth by investing in the stocks of midsize and large companies with strong earnings prospects, and selling those whose earnings prospects are deteriorating. This fund s adviser evaluates these earnings prospects through a blend of computer-driven and fundamental (company, industry, and economic) analysis Health Care Stock Fund Seeks long-term capital growth by investing in US and foreign companies that develop, produce, or distribute products and services related to health care. These include pharmaceutical firms, medical supply companies, companies that operate health care facilities, and companies engaged in research. To discourage short-term trading, the fund assesses a 1% redemption fee on shares held for less than five years High-Yield Tax-Exempt Bond Fund Seeks high current income exempt from federal tax by investing primarily in medium-quality municipal securities with an average maturity of 15 to 25 years. This fund offers the highest yields but is subject to the highest risk of principal fluctuation International Growth Stock Fund Seeks long-term capital growth by investing in the stocks of foreign companies believed by its investment advisers to exhibit above-average growth potential. To maintain geographic diversity, the fund s advisers invest in a number of international stock markets; most investments are made in Europe and in the Pacific region. To discourage short-term trading, the fund assesses a 2.0% fee on redemptions of shares purchased on or after June 27, 2003, and held for less than two months. The fee is paid directly to the fund and therefore is not considered a load Intermediate-Term Bond Index Fund Seeks to track the performance of a market-weighted bond index with an intermediate-term dollar-weighted average value Long-Term Corporate Bond Fund Seeks current income by investing primarily in high-quality corporate bonds with an average maturity of 15 to 25 years. The fund s expense advantage allows it to pursue a higher level of income with less risk than comparable funds NJ Tax-Exempt Money Market Fund Invests primarily in high-quality New Jersey municipal money market securities. This fund provides income that is exempt from both federal and New Jersey personal income taxes (continued) Retirement plan participation 449 Table AI.

18 IJBM 29,5 450 Table AI. Average annual total returns (%) Fund name Fund objective One year Three years Ten years PA Tax-Exempt Money Market Fund Invests primarily in high-quality Pennsylvania municipal money market securities. This fund provides income that is exempt from both federal and Pennsylvania personal income taxes Prime Money Market Fund Invests in a combination of commercial paper, certificates of deposit, bankers acceptances, and US government securities. This fund typically offers the highest yield of our money market funds Short-Term Corporate Bond Fund Seeks current income by investing primarily in high-quality corporate bonds with an average maturity of 1 to 3 years. This fund s expense advantage allows it to pursue a higher level of income with less risk than comparable funds Short-Term Tax-Exempt Bond Fund Seeks current income exempt from federal tax by investing primarily in high-quality municipal securities with an average maturity of 1 to 2 years. This fund pursues a higher level of income than that provided by comparable funds Short-Term Treasury Bond Fund Seeks current income by investing primarily in direct government obligations, such as US Treasury notes and other securities backed by the full faith and credit of the US government, with an average maturity of 1 to 3 years. This fund pursues a higher level of income than that provided by comparable funds Tax-Exempt Money Market Fund Invests in high-quality municipal securities issued by state and local governments across the USA. This fund provides income that is exempt from federal tax Treasury Money Market Fund Invests solely in direct government obligations, such as US Treasury bills and other short-term securities backed by the full faith and credit of the US government. This fund offers the highest credit quality available Value Index Stock Fund The fund seeks to track the performance of a benchmark index that measures the investment return of large-capitalization value stocks Windsor Stock Fund Seeks long-term capital growth and current income by investing primarily in the stocks of large and midsize companies believed by the advisers to have superior return potential not reflected in their current prices. This fund s advisers use both fundamental (company, industry, and economic research) and quantitative (computer modeling) analysis to identify those out-of-favor securities that will outperform the market over time