Madrian receives Samuelson Award for finance writing
The annual Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security, which is administered by the TIAA-CREF Institute, will go to Brigitte Madrian, Associate Professor of Economics in the Graduate School of Business, and her co-author Dennis Shea.
In addition to other winners, Madrian and Shea received the award for their article, The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior, which appeared in the November 2001 Quarterly Journal of Economics. The research article demonstrates that the automatic enrollment of employees in a 401(k) plan can exert a strong influence over their saving and investment choices. Under automatic enrollment, employees must choose to opt out of rather than opt into a voluntary savings plan such as a 401(k).
The research shows that after the introduction of automatic enrollment, many new employees simply accept the automatic or default saving and portfolio options established by the plan administrators, rather than making another, perhaps better, choice. Madrian and Sheas research shows that such automatic aspects of retirement plans could have a tremendous impact on the distribution of retirement savings available to individuals.
Marking the third year in a row that a Chicago faculty member has received the honor, the Samuelson award was presented at the Allied Social Science Associations annual meeting Friday, Jan. 3. The award was named for Paul Samuelson (A.B., 35; LL.D.,61), winner of the 1970 Nobel Memorial Prize in Economic Sciences, in honor of his achievements in the field of economics as well as for his service as a CREF trustee from 1974 to 1985.
An independent panel of judges, which included this year Robert Vishny, the Eric J. Gleacher Distinguished Service Professor of Finance in the Graduate School of Business, chooses the winners. Madrian and Shea will share a $15,000 prize, and two Harvard University professors will share the other half of a $30,000 cash award.