Self-control and early withdrawal from retirement accounts

Using a survey-elicited measure of psychological self-control and a policy change in Australia during COVID-19, we find that self-control issues significantly predict early withdrawals from retirement accounts. Individuals in the top quintile of self-control issues are 60% more likely to withdraw than those in the bottom quintile. Self-control is a strong predictor of early withdrawal, comparable to the effect of financial illiteracy, and more important than other behavioral factors like planning horizons or personality traits. The effects are economically meaningful: eliminating self-control issues would reduce predicted early withdrawals by 23%, almost as large as the effect of adverse income shocks.