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Assessing the Effectiveness of Saving Incentives

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  • R. Glenn Hubbard
  • Jonathan S. Skinner

Abstract

The authors argue that there is more to be learned from recent research on the effectiveness of targeted saving incentives than the wide variation in empirical estimates suggests. They conclude that characterizations of 'all new saving' or 'no new saving' are extreme IRAs and 401(k) plans appear to stimulate moderate amounts of new saving. The authors suggest a cost-benefit approach to ask: What is the incremental gain in capital accumulation per dollar of foregone revenue? For quite conservative measures of the saving impacts of IRAs or 401(k)s, the incremental gains in capital accumulation per dollar of lost revenue are large.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.10.4.73
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 10 (1996)
Issue (Month): 4 (Fall)
Pages: 73-90

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Handle: RePEc:aea:jecper:v:10:y:1996:i:4:p:73-90

Note: DOI: 10.1257/jep.10.4.73
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  1. Venti, Steven F & Wise, David A, 1986. "Tax-Deferred Accounts, Constrained Choice and Estimation of Individual Saving," Review of Economic Studies, Wiley Blackwell, vol. 53(4), pages 579-601, August.
  2. Gale, W.G. & Scholz, J.K., 1990. "Iras And Household Savings," Working papers 9009, Wisconsin Madison - Social Systems.
  3. Venti, Steven F & Wise, David A, 1990. "Have IRAs Increased U.S. Saving? Evidence from Consumer Expenditure Surveys," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 661-98, August.
  4. Feldstein, Martin S, 1978. "The Welfare Cost of Capital Income Taxation," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages S29-51, April.
  5. R. Glenn Hubbard & Jonathan Skinner & Stephen P. Zeldes, 1993. "The Importance of Precautionary Motives in Explaining Individual and Aggregate Saving," NBER Working Papers 4516, National Bureau of Economic Research, Inc.
  6. Eric M. Engen & William G. Gale & John Karl Scholz, 1994. "Do Saving Incentives Work?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 85-180.
  7. Daniel Feenberg & Jonathan Skinner, 1989. "Sources of IRA Saving," NBER Chapters, in: Tax Policy and the Economy, Volume 3, pages 25-46 National Bureau of Economic Research, Inc.
  8. King, Robert G & Rebelo, Sergio, 1990. "Public Policy and Economic Growth: Developing Neoclassical Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S126-50, October.
  9. Arthur B. Kennickell & Martha Starr-McCluer & Annika E. Sunden, 1996. "Saving and financial planning: some findings from a focus group," Finance and Economics Discussion Series 96-1, Board of Governors of the Federal Reserve System (U.S.).
  10. Steven F. Venti & David A. Wise, 1987. "IRAs and Saving," NBER Chapters, in: The Effects of Taxation on Capital Accumulation, pages 7-52 National Bureau of Economic Research, Inc.
  11. Martin Feldstein, 1992. "The Effects of Tax-Based Saving Incentives on Government Revenue and National Saving," NBER Working Papers 4021, National Bureau of Economic Research, Inc.
  12. David A. Wise & Steven F. Venti, 1993. "The Wealth of Cohorts: Retirement Saving and the Changing Assets of Older Americans," NBER Working Papers 4600, National Bureau of Economic Research, Inc.
  13. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
  14. Poterba, James M. & Venti, Steven F. & Wise, David A., 1995. "Do 401(k) contributions crowd out other personal saving?," Journal of Public Economics, Elsevier, vol. 58(1), pages 1-32, September.
  15. Steven F. Venti & David A. Wise, 1988. "The Determinants of IRA Contributions and the Effect of Limit Changes," NBER Chapters, in: Pensions in the U.S. Economy, pages 9-52 National Bureau of Economic Research, Inc.
  16. Kevin A. Hassett & R. Glenn Hubbard, 1996. "Tax Policy and Investment," NBER Working Papers 5683, National Bureau of Economic Research, Inc.
  17. Thaler, Richard H, 1994. "Psychology and Savings Policies," American Economic Review, American Economic Association, vol. 84(2), pages 186-92, May.
  18. Charles L. Ballard & Don Fullerton & John B. Shoven & John Whalley, 1985. "A General Equilibrium Model for Tax Policy Evaluation," NBER Books, National Bureau of Economic Research, Inc, number ball85-1, octubre-d.
  19. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  20. Poterba, J.M. & Venti, S.F. & Wise, D.A., 1992. "401(k) Plans and Tax-Deferred Savings," Working papers 92-14, Massachusetts Institute of Technology (MIT), Department of Economics.
  21. Glenn R. Hubbard & Jonathan Skinner & Stephen P. Zeldes, . "Precautionary Saving and Social Insurance," Rodney L. White Center for Financial Research Working Papers 3-95, Wharton School Rodney L. White Center for Financial Research.
  22. Zvi Bodie & John B. Shoven & David A. Wise, 1988. "Pensions in the U.S. Economy," NBER Books, National Bureau of Economic Research, Inc, number bodi88-1, octubre-d.
  23. Hubbard, R Glenn & Judd, Kenneth L, 1987. "Social Security and Individual Welfare: Precautionary Saving, Borrowing Constraints, and the Payroll Tax," American Economic Review, American Economic Association, vol. 77(4), pages 630-46, September.
  24. Steven F. Venti & David A. Wise, 1992. "Government Policy and Personal Retirement Saving," NBER Chapters, in: Tax Policy and the Economy, Volume 6, pages 1-42 National Bureau of Economic Research, Inc.
  25. Martin S. Feldstein & Daniel R. Feenberg, 1983. "Alternative Tax Rules and Personal Saving Incentives: Microeconomic Data and Behavioral Simulations," NBER Chapters, in: Behavioral Simulation Methods in Tax Policy Analysis, pages 173-210 National Bureau of Economic Research, Inc.
  26. B. Douglas Bernheim & John B. Shoven, 1991. "National Saving and Economic Performance," NBER Books, National Bureau of Economic Research, Inc, number bern91-2, octubre-d.
  27. B. Douglas Bernheim, 1996. "Rethinking Saving Incentives," Working Papers 96009, Stanford University, Department of Economics.
  28. Steven F. Venti & David A. Wise, 1991. "The Saving Effect of Tax-deferred Retirement Accounts: Evidence from SIPP," NBER Chapters, in: National Saving and Economic Performance, pages 103-130 National Bureau of Economic Research, Inc.
  29. Posner, Richard A., 1995. "Aging and Old Age," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226675664, April.
  30. Orazio P. Attanasio & Thomas C. DeLeire, 1994. "IRAs and Household Saving Revisited: Some New Evidence," NBER Working Papers 4900, National Bureau of Economic Research, Inc.
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