“Maintaining One’s Living Standard at Old Age: What Does that Mean? Evidence Using Panel Data from Germany,” by Christian Dudel, Notburga Ott and Martin Werding (CESifo Working Paper No. 4223, April 2013, .pdf format, 30p.). Note: Links to the abstract and full-text can be found at:
www.cesifo-group.de/ifoHome/publications/working-papers/CESifoWP/CESifoWPdetails?wp_id=19087946
“Is there an optimal pension fund size? A scale-economy analysis of administrative and investment costs,” by Jacob Bikker (Working Paper 376, April 2013, .pdf format, 35p.). Note: Links to the abstract and full-text can be found at:
“Cohort mortality risk or adverse selection in the UK annuity market?” by Edmund Cannon and Ian Tonks (PI-1304, April 2013, .pdf format, 42p.).
Abstract:
The “money’s worth” measure has been used to assess whether annuities are fairly valued and also as evidence for adverse selection in the annuity market. However, a regulated life assurer with concerns about predicting long-run mortality may price annuities to reduce these risks which will affect the money’s worth. We provide a simple model of the effect of cohort mortality risk on the money’s worth. We demonstrate that cohort mortality risk is quantitatively important, and show that it is not possible to identify the effect of a cohort mortality risk model from that of an adverse selection model.
A. “Financial Literacy and High-Cost Borrowing in the United States,” by Annamaria Lusardi and Carlo de Bassa Scheresberg (w18969, .pdf format, 41p.).
Abstract:
In this paper, we examine high-cost methods of borrowing in the United States, such as payday loans, pawn shops, auto title loans, refund anticipation loans, and rent-to-own shops, and offer a portrait of borrowers who use these methods. Considering a representative sample of more than 26,000 respondents, we find that about one in four Americans has used one of these methods in the past five years. Moreover, many young adults engage in high-cost borrowing: 34 percent of young respondents (aged 18–34) and 43 percent of young respondents with a high school degree have used one of these methods. Using well-tested questions to measure financial literacy, we document that most high-cost borrowers display very low levels of financial literacy, i.e., they lack numeracy and do not possess knowledge of basic financial concepts. Most importantly, we find that those who are more financially literate are much less likely to have engaged in high-cost borrowing. Our empirical work shows that it is not only the shocks inflicted by the financial crisis or the structure of the financial system but that the level of financial literacy also plays a role in explaining why so many individuals have made use of high-cost borrowing methods.
B. “Shrouded Costs of Government: The Political Economy of State and Local Public Pensions,” by Edward L. Glaeser and Giacomo A. M. Ponzetto (w18976, April 2013, .pdf format, 67p.).
Abstract:
Why are public-sector workers so heavily compensated with pensions and other non-pecuniary benefits? In this paper, we present a political economy model of shrouded compensation in which politicians compete for taxpayers’ and public employees’ votes by promising compensation packages, but some voters cannot evaluate every aspect of compensation. If pension packages are “shrouded,” meaning that public-sector workers better understand their value than ordinary taxpayers, then compensation will be inefficiently back-loaded. In equilibrium, the welfare of public-sector workers could be improved, holding total public sector costs constant, if they received higher wages and lower pensions. Central control over dispersed municipal pensions has two offsetting effects on pension generosity: more state-level media attention helps taxpayers better understand pension costs, which reduces pension generosity; but a larger share of public sector workers will live within the jurisdiction, which increases pension generosity. We discuss pension arrangements in two decentralized states (California and Pennsylvania) and two centralized states (Massachusetts and Ohio) and find that in these cases, centralization appears to have modestly reduced pension arrangements; but, as the model suggests, this finding is unlikely to be universal.
“Evidence on Individual Preferences for Longevity Risk,” by Gaetan Delprat, Marie-Louise Leroux, and Pierre-Carl Michaud (Working Paper No. 4196, April 2013, .pdf format, 19p.). Note: Links to the abstract and full-text can be found at:
www.cesifo-group.de/ifoHome/publications/working-papers/CESifoWP/CESifoWPdetails?wp_id=19087556
“Age Biased Technical and Organisational Change, Training and Employment Prospects of Older Workers,” by Luc Behaghel, Eve Caroli and Muriel Roger (Working Paper No. 431, April 2013, .pdf format, 28p.). Note: Links to the abstract and full-text can be found at:
www.banque-france.fr/en/economics-statistics/research/working-paper-series/document/430-2.html
“Do Public Pension Obligations Affect State Funding Costs?” by Jean Burson, John B Carlson, Ozgur Emre Ergungor and Patricia Waiwood (WP 13-01, February 2013, .pdf format, 28p.). Note:
Abstract:
States’ unfunded pension obligations to their current and retired employees have exploded in recent years to levels that are estimated to be between $750 billion and $4.4 trillion. In theory, this massive debt should have implications for states’ ability to meet their financial obligations and a measurable impact on funding costs. Yet, we find no evidence that municipal bond markets are pricing the risks to states’ fiscal health arising from these large obligations.
“The Economic Importance of Financial Literacy: Theory and Evidence,” by Annamaria Lusardi and Olivia S. Mitchell (w18952, April 2013, .pdf format, 63p.).
Abstract:
In this paper, we undertake an assessment of the rapidly growing body of research on financial literacy. We start with an overview of theoretical research which casts financial knowledge as a form of investment in human capital. Endogenizing financial knowledge has important implications for welfare as well as policies intended to enhance levels of financial knowledge in the larger population. Next, we draw on recent surveys to establish how much (or how little) people know and identify the least financially savvy population subgroups. This is followed by an examination of the impact of financial literacy on economic decision-making in the United States and elsewhere. While the literature is still growing, conclusions may be drawn about the effects and consequences of financial illiteracy and what works to remedy these gaps. A final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy.
A. “Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution,” by Lukas Inderbitzin, Stefan Staubli, Josef Zweimuller (Discussion Paper No. 7330, April 2013, .pdf format, 46p.). Note: Links to the abstract and full-text can be found at:
www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=7330
B. “How Does Subjective Well-Being Evolve with Age? A Literature Review,” by Beatriz Fabiola Lopez Ulloa, Valerie Moller, and Alfonso Sousa-Poza (Discussion Paper No. 7328, April 2013, .pdf format, 33p.). Note: Links to the abstract and full-text can be found at:
www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=7328
“Estimating Intensive and Extensive Tax Responsiveness: Do Older Workers Respond to Income Taxes?” by Abby Alpert and David Powell (WR987, March 2013, .pdf format, 40p.). Note: Links to the abstract and full-text can be found at:
“New Evidence on Self-Employment Transitions Among Older Americans with Career Jobs,” by Kevin E. Cahill, Michael D. Giandrea, and Joseph F. Quinn (Working Paper No. 463, March 2013, .pdf format, 23p.). Note: Links to the abstract and full-text can be found at:
“Adjusted Money’s Worth Ratios In Life Annuities,” by Jaime Casassus and Eduardo Walker (PI-1303, February 2013, .pdf format, 53p.).
Abstract:
The Money’s Worth Ratio (MWR) measures an annuity’s actuarial fairness. It is calculated as the discounted present value of the annuity’s expected future payments divided by its cost. We argue that, this measure may overestimate the value-for-money obtained by annuitants, since it does not adjust for liquidity or risk factors. Measuring these factors is challenging, requiring detailed knowledge of the annuity provider’s assets, liabilities, and of the stochastic processes followed by them. Using a multi-factor continuous-time model and option pricing theory, we propose a simple solution for an Adjusted MWR (AMWR), which does consider illiquidity and default risk. We implement this solution for the competitive Chilean annuity market, which offers unadjusted MWRs above 1, finding that indeed these ratios are biased upward 7 percent on average. We also present estimates of default option values, asset insufficiency probabilities and implied credit spreads for each annuity provider.
A. “Does Mental Productivity Decline with Age? Evidence from Chess Players,” by Marco Bertoni, Giorgio Brunello, and Lorenzo Rocco (Discussion Paper No. 7311, March 2013, .pdf format, 15p.). Note: Links to the abstract and full-text can be found at:
www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=7311
B. “Evidence on Individual Preferences for Longevity Risk,” by Gaetan Delprat, Marie-Louise Leroux, and Pierre-Carl Michaud (Discussion Paper No. 7317, March 2013, .pdf format, 19p.). Note: Links to the abstract and full-text can be found at:
www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=7317
A. “The Economic Importance of Financial Literacy: Theory and Evidence,” by Annamaria Lusardi and Olivia S. Mitchell (WP2013-02, March 2013, .pdf format, 63p.). Note: Links to the abstract and full-text can be found at:
www.pensionresearchcouncil.org/publications/document.php?file=1040
B. “Complexity as a Barrier to Annuitization: Do Consumers Know How to Value Annuities?” by Jeffrey R. Brown, Arie Kapteyn, Erzo F. P. Luttmer, and Olivia S. Mitchell (WP2013-01, March 2013, .pdf format, 50p.). Note: Links to the abstract and full-text can be found at:
www.pensionresearchcouncil.org/publications/document.php?file=1040
“A Regression-Based Medical Care Expenditure Index for Medicare Beneficiaries,” by Anne E. Hall, Tina Highfill (WP2013-4, March 2013, .pdf format, 39p.).
Abstract:
We construct a disease-based price index for Medicare beneficiaries using data from the Medicare Current Beneficiary Survey from 2001-2005. We create the index by modeling total health-care expenditure as a function of the diagnoses of 27 illnesses. The coefficients from the regression are used to divide up each beneficiary’s spending (following the method outlined in Trogdon et al. 2008) among his or her diagnosed illnesses. Spending for each illness is then aggregated over beneficiaries. An average price for each illness is calculated by dividing the total expenditure by the number of patients with the illness. We then use the prices to construct a Laspeyres price index for medical care indexed to 2001. This index grows at an average annual rate of about 6% from 2001 to 2005. Average nominal expenditure by Medicare beneficiaries grows at an average annual rate of 8.6% but, after nominal expenditure is deflated with the price index, average real expenditure grows by only 2.3% per year.
www.bea.gov/papers/pdf/a_regression_base_medical_care_expenditure_index_for_medicare.pdf
“Reform of ill-health retirement of police in England and Wales: impact on pension liabilities and the role of local finance,” by Rowena Crawford and Richard Disney (W13/06, March 2013, .pdf format, 29p.). Note: Links to the abstract and full-text can be found at:
“How best to measure pension adequacy,” by Aaron George Grech (CASE/172, March 2013, .pdf format, 35p.). Note: Links to the abstract and full-text can be found at:
sticerd.lse.ac.uk/case/_new/publications/abstract.asp?index=4202
“Personality Traits and Economic Preparation for Retirement,” by Michael Hurd, Angela Lee Duckworth, Susann Rohwedder and David Weir (WP 2012-279, Sept. 2012, .pdf format, 25p.). Note: Links to the abstract and full-text can be found at:
www.mrrc.isr.umich.edu/publications/index_abstract.cfm?ptid=1&pid=886
“Good Practice Principles in Modelling Defined Contribution Pension Plans,” by Kevin Dowd and David Blake (PI-1302, March 2013, .pdf format, 22p.).
Abstract:
We establish 15 good practice principles in modelling defined contribution pension plans. These principles cover the following issues: model specification and calibration; modelling quantifiable uncertainty; modelling member choices; modelling member characteristics, such as occupation and gender; modelling plan charges; modelling longevity risk; modelling the post-retirement period; integrating the preand post-retirement periods; modelling additional sources of income, such as the state pension and equity release; modelling extraneous factors, such as unemployment risk, activity rates, taxes and entitlements; scenario analysis and stress testing; periodic updating of the model and changing assumptions.
A. “Rethinking Elderly Poverty: Time for a Health Inclusive Poverty Measure?”A. by Sanders Korenman and Dahlia Remler (18900, March 2013, .pdf format, 68p.).
Abstract:
Census’s Supplemental Poverty Measure (SPM) nearly doubles the elderly poverty rate compared to the “Official” Poverty Measure (OPM), a result of the SPM subtraction of medical out-of-pocket (MOOP) expenditures from income. Neither the SPM nor OPM counts health benefits or assets as resources. Validation studies suggest that subtracting MOOP from resources worsens a poverty measure’s predictive validity and excluding assets exacerbates this bias, since assets fund MOOP.
The SPM is based on a 1995 NAS report that recommended a health-exclusive poverty measure, despite considering it, conceptually, a “second best” to a Health-Inclusive Poverty Measure (HIPM). We analyze the reasons for the NAS recommendation and argue that constructing a HIPM is now feasible if we conceptualize health needs as a need for health insurance, and if plans with non-risk-rated premiums and caps on MOOP are universally available, a condition largely met by the Affordable Care Act and Medicare Advantage Plans.
We describe four HIPM variants and present analyses that suggest the SPM treatment of MOOP results in a less valid measure of elderly poverty and an overstatement of the elderly poverty rate (by up to 5.5 percentage points or 50 percent). Many elderly classified as poor by the SPM’s unlimited MOOP deduction are not poorly insured persons with incomes near the poverty line, but well-insured persons with incomes well above the poverty line.
B. “Retirement Plan Type and Employee Mobility: The Role of Selection and Incentive Effects,” by Gopi Shah Goda, Damon Jones, and Colleen Flaherty Manchester (w18902, March 2013, .pdf format, 49p.).
Abstract:
Employer-provided pension plans may affect employee mobility both through an “incentive effect,” where the bundle of benefit characteristics such as vesting rules, pension wealth accrual, risk, and liquidity affect turnover directly, and a “selection effect,” where employees with different underlying mobility tendencies select across plans or across firms with different types of plans. In this paper, we quantify the role of selection by exploiting a natural experiment at a single employer in which an employee’s probability of transitioning from a defined benefit (DB) to a defined contribution (DC) pension plan was exogenously affected by default rules. Using regression discontinuity as well as differences-in-regression-discontinuities (DRD) methods, we find evidence that employees with higher mobility tendencies self-select into the DC plan. Our results suggest that selection likely contributes to the observed positive relationship between the transition from DB to DC plans and employee mobility in settings where employees sort into plans or employers. Counter to conventional wisdom, we find a negative direct effect of the DC plan on turnover relative to the DB plan, which underscores the multi-dimensional difference between these plans.
C. “Financial Education and Choice in State Public Pension Systems,” by Julie Agnew and Joshua Hurwitz (w18907, March 2013, .pdf format, 56p.).
Abstract:
As more and more public pension systems are shifting away from a defined benefit only framework, the complexity of the financial decisions facing public employees is increasing. This raises some concerns about the financial literacy of participants and their ability to make informed decisions. While surveys addressing financial education in private plans are available, little is known about what types of education and advice are offered in public plans. This paper fills this gap by presenting new results from the first National Public Pension Plan Financial Education Survey. The paper focuses specifically on primary defined contribution and hybrid plans. The results indicate that some form of education or advice is offered by every surveyed plan and that the sponsoring entity is actively involved in the development of the programs. However, it appears that legal uncertainties related to advice and education may be a problem for a few plans. In addition, more rigorous evaluation methods to test programs are needed. The paper concludes with suggestions for areas of future research.
“Analysis of pension reform scenarios in a rational world: An application of the NIBAX behavioural micro-simulation model,” by Justin van de Ven (Working Paper No. 117, March 2013, .pdf format, 60p.). Note: Links to the abstract and full-text can be found at:
research.dwp.gov.uk/asd/asd5/report_abstracts/wp_abstracts/wpa_117.asp
“How Sensitive Are Individual Retirement Expectations to Raising the Retirement Age?” by Andries de Grip, Didier Fouarge, and Raymond Montizaan (Discussion Paper No. 7269, March 2013, .pdf format, 38p.). Note: Links to the abstract and full-text can be found at:
www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=7269
“Can Amputation Save the Hospital? The Impact of the Medicare Rural Flexibility Program on Demand and Welfare,” by Gautam Gowrisankaran, Claudio Lucarelli, Philip Schmidt-Dengler, and Robert Town (w18894, March 2013, .pdf format, 35p.).
Abstract:
This paper seeks to understand the impact of the Medicare Rural Hospital Flexibility (Flex) Program on rural resident hospital choice and welfare. The Flex program created a new class of hospital, the Critical Access Hospital (CAH), which receives more generous reimbursement in return for limits on capacity and length of stay. A hospital that converted to CAH status would see its inpatient admissions drop by a mean of 5.4%, of which almost all was driven by factors other than capacity. The program increased consumer welfare if it reduced the closure rate by at least 4 percentage points.
“Ageing and fiscal sustainability in a small euro area economy,” by Gabriela Lopes de Castro, Jose R. Maria, Ricardo Mourinho Felix, and Claudia Braz (Working Paper 1304, March 2013, .pdf format, 38p.). Note: Links to the abstract and full-text can be found at:
“Incentives, shocks or signals: labour supply effects of increasing the female state pension age in the UK,” by Jonathan Cribb, Carl Emmerson and Gemma Tetlow (W13/03, March 2013, .pdf format, 30p.). Note: Links to the abstract and full-text can be found at:
A. “Can Long-Term Care Insurance Partnership Programs Increase Coverage and Reduce Medicaid Costs?” by Wei Sun and Anthony Webb (WP No. 2013-8, March 2013, .pdf format, 21p.). Note: Links to the abstract and full-text can be found at:
B. “SSI for Disabled Immigrants: Why Do Ethnic Networks Matter?” by Delia Furtado and Nikolaos Theodoropoulos (WP No. 2013-7, March 2013, .pdf format, 9p.). Note: Links to the abstract and full-text can be found at:
crr.bc.edu/working-papers/ssi-for-disabled-immigrants-why-do-ethnic-networks-matter/
“Aging and Pension Reform: Extending the Retirement Age and Human Capital Formation,” by Edgar Vogel, Alexander Ludwig, and Axel Boersch-Supan (w18856, March 2013, .pdf format, 42p.).
Abstract:
Projected demographic changes in industrialized and developing countries vary in extent and timing but will reduce the share of the population in working age everywhere. Conventional wisdom suggests that this will increase capital intensity with falling rates of return to capital and increasing wages. This decreases welfare for middle aged agents with assets accumulated for retirement. This paper addresses three important adjustments channels to dampen these detrimental effects of ageing: investing abroad, endogenous human capital formation and increasing the retirement age. Although non of these suggestions is new in itself, we examine their effects jointly in one coherent model. Our quantitative finding is that openness has a relatively mild effect. In contrast, endogenous human capital formation in combination with an increase in the retirement age has strong effects. Under these adjustments maximum welfare losses of demographic change for households alive in 2010 are reduced by about 3 percentage points.
A. “The Use of VA Disability Benefits and Social Security Disability Insurance Among Veterans,” by Janet M. Wilmoth, Andrew S. London and Colleen M. Heflin (WP No. 2013-06, February 2013, .pdf format, 25p.). Note: Links to the abstract and full-text can be found at:
B. “How Does the Composition of Disability Insurance Applicants Change Across Business Cycles?” by Norma B. Coe and Matthew S. Rutledge (WP No. 2013-05, February 2013, .pdf format, 36p.). Note: Links to the abstract and full-text can be found at:
C. “The Economic Implications of the Department of Labor’s 2010 Proposals for Broker-Dealers,” by Alicia H. Munnell, Anthony Webb and Francis M. Vitagliano (WP No. 2013-04, February 2013, .pdf format, 44p.). Note: Links to the abstract and full-text can be found at:
“Food Stamps, Food Sufficiency, and Diet-Related Disease among the Elderly,” by Nadia Greenhalgh-Stanley and Katie Fitzpatrick (DP 1407-13, February 2013, .pdf format, 44p.).
Abstract:
In 2010, more than 2.3 million households (7.9 percent) with an elderly member were food insecure and even more reported some difficulties with obtaining adequate resources for food (Coleman-Jensen et al. 2010). It is widely acknowledged that any food insufficiency contributes to poor health and increases the likelihood of diet-related disease. The Supplemental Nutrition Assistance Program (SNAP), formerly the Food Stamp Program, is the primary nutrition assistance program aimed at reducing food-related hardship. Yet, participation rates for the eligible elderly are estimated at 35 percent (Cunnyngham 2010). This low take-up rate among the elderly and its effects on food insufficiency and diet-related disease is relatively unexplored. This paper uses restricted-use Health and Retirement Study (HRS) data to examine the effect of SNAP participation on reported food insufficiency, health measures, and diet-related disease to better understand potential long-term health consequences of the elderly. To address the endogeneity of the SNAP participation decision and identify the causal effects of SNAP use on the elderly, we instrument for SNAP participation with state and county-level variables related to SNAP outreach, including radio and television advertisements, and state SNAP rules. We find that the causal effect of SNAP participation results in higher levels of preventative health care, some improved diet-related outcomes, but a higher incidence of food distress, which has potential policy implications about the generosity of SNAP benefits for the elderly.
“A General Procedure for Constructing Mortality Models,” by Andrew Hunt and David Blake (PI-1301, February 2013, .pdf format, 50p.).
Abstract:
Recently, a large number of new mortality models have been proposed to analyse historic mortality rates and project them into the future. Many of these suffer from being over-parametrised or have terms added in an ad hoc manner which cannot be justified in terms of demographic significance. In addition, poor specification of a model can lead to period effects in the data being wrongly attributed to cohort effects which results in the model making implausible projections. We present a general procedure for constructing mortality models using a combination of a toolkit of functions and expert judgement. By following the general procedure, it is possible to identify sequentially every significant demographic feature in the data and give it a parametric structural form. We demonstrate using UK mortality data that the general procedure produces a relatively parsimonious model that nevertheless has a good fit to the data.
“Health Care Reform and Long-Term Care in the Netherlands,” by Erik Schut, Stephane Sorbe, and Jens Hoj (OECD Economics Department Working Paper No. 110, January 2013, .pdf format, 37p.). Note: Links to the abstract and full-text can be found at:
A. “It Pays to Set the Menu: Mutual Fund Investment Options in 401(k) Plans,” by Veronika K. Pool, Clemens Sialm, and Irina Stefanescu (w18764, February 2013, .pdf format, 51p.).
Abstract:
This paper investigates whether mutual fund families acting as trustees of 401(k) plans display favoritism toward their own funds. Using a hand-collected dataset on retirement investment options, we show that poorly-performing funds are less likely to be removed from and more likely to be added to a 401(k) menu if they are affiliated with the plan trustee. We find no evidence that plan participants undo this affiliation bias through their investment choices. Finally, the subsequent performance of poorly-performing affiliated funds indicates that these trustee decisions are not information driven and are costly to retirement savers.
B. “On Financing Retirement with an Aging Population,” by Ellen R. McGrattan and Edward C. Prescott (w18760, February 2013, .pdf format, 37p.).
Abstract:
A problem facing the United States is financing retirement consumption as its population ages. Policy analysts increasingly advocate savings-for-retirement systems, but are concerned with insufficient savings opportunities with limited government debt. This concern is unwarranted. First, there is more productive capital than commonly assumed in macroeconomic modeling. Second, if the policy reform subsumes the elimination of capital income taxes, then the value of business equity increases relative to the capital stock. Phasing in a switch from the current U.S. system to a savings-for-retirement system without capital income taxes increases welfare of all current and future cohorts.
C. “Empirical Determinants of Intertemporal Choice,” by Jeffrey R. Brown, Zoran Ivkovic, and Scott Weisbenner (w18755, February 2013, .pdf format, 50p.).
Abstract:
We study the empirical determinants of intertemporal choice by analyzing a unique decision Croatian retirees made recently about whether to accept an immediate pension payment or a larger stream of delayed payments. Individual decisions are correlated in sensible ways with income, liquidity constraints, longevity expectations, and other covariates. Attitudes toward government also matter: those less confident that the government will honor its commitments are more likely to take the immediate stream of payments. Those who believe it is important to receive ‘the full amount due, no matter how long it takes’ are substantially more likely to take the delayed payments.
A. “What drives pension indexation in turbulent times? An empirical examination of Dutch pension funds,” by Dirk Broeders, Paul Hilbers and David Rijsbergen (Working Paper No. 368, January 2013, .pdf format, 46p.). Note: Links to the abstract and full-text can be found at:
B. “Are Retirement Decisions Vulnerable to Framing Effects? Empirical Evidence from NL and the US,” by Federica Teppa and Maarten van Rooij (Working Paper No. 366, December 2012, .pdf format, 46p.). Note: Links to the abstract and full-text can be found at:
“At the Corner of Main and Wall Street: Family Pension Responses to Liquidity Change and Perceived Returns,” by Thomas Bridges and Frank Stafford (WP 2012-282, December 2012, .pdf format, 36p.). Note: Links to the abstract and full-text can be found at:
www.mrrc.isr.umich.edu/publications/index_abstract.cfm?ptid=1&pid=879
“Active vs. Passive Decisions and Crowd-out in Retirement Savings Accounts: Evidence from Denmark,” by Raj Chetty, John N. Friedman, Soren Leth-Peterson, Torben Heien Nielsen, and Tore Olsen (RWP13-002, January 2013, .pdf format, 71p.). Note: Links to the abstract and full-text can be found at:
web.hks.harvard.edu/publications/workingpapers/citation.aspx?PubId=8742
“Heterogeneity in time preference in older households,” by Antoine Bozio, Guy Laroque and Cormac O’Dea (W13/02, January 2013, .pdf format, 30p.). Note: Links to the abstract and full-text can be found at:
“Population Ageing and PAYG Pensions in the OLG Model,” by Giam Pietro Cipriani (Discussion Paper No. 7144, January 2013, .pdf format, 8p.). Note: Links to the abstract and full-text can be found at:
www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=7144
“Harsh occupations, life expectancy and social security,” by Maria Racionero and Pierre Pestieau (Working Paper No. 678, January 2013, .pdf format, 23p.). Note: Links to the abstract and full-text can be found at:
cbe.anu.edu.au/research-papers/dpcepr/harsh-occupations,-life-expectancy-and-social-security/
“The Great Recession, Older Workers with Disabilities, and Implications for Retirement Security,” by Onur Altindag, Lucie Schmidt and Purvi Sevak (WP 2012-277, November 2012, .pdf format, 31p.). Links to an abstract and full text are available at:
www.mrrc.isr.umich.edu/publications/index_abstract.cfm?ptid=1&pid=875
“Health, Education, and the Post-Retirement Evolution of Household Assets,” by James M. Poterba, Steven F. Venti, and David A. Wise (w18695, January 2013, .pdf format, 44p.).
Abstract:
This paper explores the relationship between education and the evolution of wealth after retirement. Asset growth following retirement depends in part on health capital and financial capital accumulated prior to retirement, which in turn are strongly related to educational attainment. These ‘initial conditions’ for retirement can have a lingering effect on subsequent asset evolution. Our aim is to disentangle the effects of education on post-retirement asset evolution that operate through health and financial capital accumulated prior to retirement from the effects of education that impinge directly on asset evolution after retirement. We consider the indirect effect of education through financial resources-in particular Social Security benefits and defined benefit pension benefits-and through health capital that was accumulated before retirement. We also consider the direct effect of education on asset growth following retirement, emphasizing the correlation between education and the returns households earn on their post-retirement investments. Households with different levels of education invest, on average, in different assets, and they may consequently earn different rates of return. Finally, we consider the additional effects of education that are not captured through these pathways. Our empirical findings suggest a substantial association between education and the evolution of assets. For example, for two person households the growth of assets between 1998 and 2008 is on average much greater for college graduates than for those with less than a high school degree. This difference ranges from about $82,000 in the lowest asset quintile to over $600,000 in the highest.
“Diminishing Margins: Housing Market Declines and Family Financial Responses,” by Frank Stafford, Erik Hurst and Bing Chen (WP2012-276, December 2012, .pdf format, 30p.). Note: Links to the abstract and full-text can be found at:
www.mrrc.isr.umich.edu/publications/index_abstract.cfm?ptid=1&pid=872
“Optimal Financial Knowledge and Wealth Inequality,” by Annamaria Lusardi, Pierre-Carl Michaud, and Olivia S. Mitchell (w18669, January 2013, .pdf format, 48p.).
Abstract:
While financial knowledge is strongly positively related to household wealth, there is also considerable cross-sectional variation in both financial knowledge and net asset levels. To explore these patterns, we develop a calibrated stochastic life cycle model featuring endogenous financial knowledge accumulation. The model generates substantial wealth inequality, over and above that of standard life cycle models; this is because higher earners typically have more hump-shaped labor income profiles and lower retirement benefits which, when interacted with precautionary saving motives, boost their need for private wealth accumulation and thus financial knowledge. Our simulations show that endogenous financial knowledge accumulation has the potential to account for a large proportion of wealth inequality. The fraction of the population which is rationally financially ‘ignorant’ depends on the generosity of the retirement system and the level of means-tested benefits. Educational efforts to enhance financial savvy early in the life cycle so as to produce one percentage point excess return per year would be valued highly by people in all educational groups.
“Aging and Productivity: Introduction,” by David E. Bloom and Alfonso Sousa-Poza (PGDA Working Paper No. 98, January 2013, .pdf format, 8p.). There is no abstract for this paper.
A. “Sticky Ages: Why Is Age 65 Still a Retirement Peak?” by Norma B. Coe, Mashfiqur Khan and Matthew S. Rutledge (WP No. 2013-2, January 2013, .pdf format, 29p.). Note: Links to the abstract and full-text can be found at:
crr.bc.edu/working-papers/sticky-ages-why-is-age-65-still-a-retirement-peak/
B. “Accumulation and Decumulation Strategies in the Wake of the Financial Crisis,” by Richard W. Kopcke, Anthony Webb, and Josh Hurwitz (WP No. 2013-1, January 2013, .pdf format, 19p.). Note: Links to the abstract and full-text can be found at:
C. “Employee Mobility and Employer-Provided Retirement Plans,” by Gopi Shah Goda, Damon Jones and Colleen Flaherty Manchester (WP No. 2012-28, November 2012, .pdf format, 47p.). Note: Links to the abstract and full-text can be found at:
crr.bc.edu/working-papers/employee-mobility-and-employer-provided-retirement-plans/
“Cypriot Mortality and Pension Benefits,” by Andreas Milidonis (Discussion Paper PI-1209, December 2012, .pdf format, 12p.).
Abstract:
Mortality trends in Cyprus show a similar decreasing trend over the past thirty years to other developed countries. Using detailed, age specific data from 2003 and 2009, we estimate the impact of the change in Cypriot male and female mortality on a stylized life annuity framework for a Cypriot retiree. Based on these results and the general pension framework in Cyprus, we propose a few measures that can alleviate the burden of decreased mortality on pension obligations.
“Automatic Enrollment, Employee Compensation, and Retirement Security,” by Barbara Butrica and Nadia Karamcheva (Discussion Paper 12-02, December 2012, .pdf format, 49p.). Note: Links to the abstract and full-text can be found at:
“Is Information Overrated? Evidence from the Pension Domain,” by Henriette Prast, Federica Teppa and Anouk Smits (Working Paper No. 360, December 2012, .pdf format, 38p.). Note: Links to the abstract and full-text can be found at:
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