TIAA Announces Winners of the 2011 TIAA Paul A. Samuelson Award

Winning paper underscores the need for financial education

New York, December 5, 2011 - The TIAA Institute today announced the winners of the sixteenth annual TIAA Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security.

The winners for this year’s award include Brigitte C. Madrian, Aetna Professor of Public Policy and Corporate Management, and David I. Laibson, Professor of Economics, both from Harvard University, along with James J. Choi, Associate Professor of Finance, Yale University in recognition of their paper, “Why Does the Law of One Price Fail?-An Experiment on Index Mutual Funds.”

The winning paper highlights the need for increased financial education and clearly demonstrates how education and communication materials can help individuals make better informed investment decisions.

The paper specifically examines why individuals select high-fee index mutual funds over lower-cost options that can produce the same returns. The study asked individuals to allocate $10,000 across four S&P index funds with the objective of maximizing their investment returns. The study found individual investors consistently fail to recognize the impact of fund fees because they place greater emphasis on annualized returns since a fund’s inception. It also found that people with more financial education generally paid lower fees, and those that paid higher fees were less confident that they were making the best investment decision.

“Even those who should have the financial knowledge to make sound investment choices often rely on simple rules of thumb, like strong past performance, when making important investment decisions,” said Samuelson Award judge, Dr. Julie Agnew. “This demonstrates that financial service providers should never assume that individuals are making fully rational decisions that consider the most important investment attributes.”

“The study provides evidence that as individuals receive financial education they tend to make better investment decisions, in this case choosing the funds with lower fees,” said Stephanie Bell-Rose, head of the TIAA Institute. “This is consistent with research which indicates people with increased financial education are more likely to plan for retirement and accumulate more than double the wealth of those who do not plan.1”

“This paper is outstanding in all respects: the idea, the execution and the insights it provides. The implications for improving investor decision-making are clear,” said Samuelson Award judge, Dr. Thomas Rietz. “Investors tend to ignore costs when choosing mutual funds. This new research can help improve net returns and lifetime financial security for all.”

Samuelson Award Background

The award is named after Nobel Prize winner Paul A. Samuelson in honor of his achievements in the field of economics, as well as for his service as a CREF trustee from 1974-1985. The Samuelson Award is given annually in recognition of an outstanding research publication containing ideas that the public and private sectors can use to maintain and improve America’s lifelong financial wellbeing. A $10,000 prize is awarded to the winner.

The Samuelson Award winner is selected by a panel of distinguished judges made up of TIAA Institute fellows and previous award winners. This year’s panel includes:

  • Dr. Julie Agnew, Associate Professor, College of William and Mary
  • Dr. George Akerlof, Nobel Laureate, Visiting Scholar, International Monetary Fund and Professor, Cal-Berkeley
  • Dr. Thomas Rietz, Professor, University of Iowa
  • Dr. Joe Quinn, Professor, Boston College
  • Dr. Stephen Zeldes, Professor, Columbia University

The TIAA Institute will present the Samuelson award on January 6, 2012 in Chicago during the Allied Social Science Associations Annual Convention.

For more information about the TIAA Institute, which manages the Samuelson Award program, visit .

About TIAA

TIAA ( is a national financial services organization with $440 billion in combined assets under management (as of 9/30/11), and is the leading provider of retirement services in the academic, research, medical and cultural fields.

About TIAA Institute

The TIAA Institute is a thought leader and model for knowledge-building and public engagement on lifetime financial security, retirement planning, and organizational success in higher education and the charitable and public sectors.

Media Contact

Ken Luck, TIAA
704 988-1068

News Release Addendum

Samuelson Award Winner Bios

Dr. Madrian received her Ph.D. in economics from the Massachusetts Institute of Technology and studied economics for her B.A. and M.A. at Brigham Young University. Madrian is the Director of the Social Science Program at the Radcliffe Institute for Advanced Study. She is also a research associate at the National Bureau of Economic Research and co-editor of the Journal of Human Resources. Her work in investment behavior has impacted the design of employer-sponsored savings plans in the U.S. and has influenced pension reform legislation both in the U.S. and abroad. She has also examined the impact of health insurance on the job choice and retirement decisions of employees and the hiring decisions of firms.

Dr. Laibson received his Ph.D. from the Massachusetts Institute of Technology and earned his B.A. at Harvard University in economics. He also attended the London School of Economics where he studied econometrics and mathematical economics for his MSc. Laibson is the Research Associate at the National Bureau of Economic Research, where he is member of the Programs in Asset Pricing, Aging, and Economic Fluctuations and Growth. He serves on several editorial boards, as well as the boards of the Health and Retirement Survey and the Pension Research Council. Laibson co-organizes the Russell Sage Foundation's Summer School in Behavioral Economics. His research studies macroeconomics, psychology and economics, neuroeconomics, and household finance.

Dr. Choi received his Ph.D. and B.A. from Harvard University in economics. Choi's research focuses on various aspects of household investment behavior and the effect those investments have on security prices. His work has led to changes in 401(k) plan design at many U.S. corporations and has influenced pension legislation both in the U.S. and abroad.