IRAs and Household Saving Revisited: Some New Evidence
AbstractThe effectiveness of tax-favored savings accounts in raising national savings depends crucially upon the willingness of households to reduce consumption in order to finance contributions to these accounts. The debate over the tax deductibility of IRA's has centered on whether IRA contributions represented new savings or reshuffled assets. We devise a test to distinguish between these two hypotheses where we compare the behavior of households which just opened an IRA account with that of households which already had an IRA account. Our test accounts for any unobservable heterogeneity across the two groups. We find evidence that supports the view that households financed their IRA contributions primarily through reductions in their stocks of other assets. Our results indicate that less than 20% of IRA contributions represented addition to national savings.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4900.
Date of creation: Oct 1994
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- Attanasio, O. & DeLeire, T.C., 1994. "IRAs and household saving revisited: some new evidence," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gale, W.G. & Scholz, J.K., 1990.
"Ira'S And Households Saving,"
16, California Los Angeles - Applied Econometrics.
- Burman, Leonard E. & Cordes, Joseph J. & Ozanne, Larry, 1990. "IRAs and National Savings," National Tax Journal, National Tax Association, vol. 43(3), pages 259-83, September.
- Steven F. Venti & David A. Wise, 1986.
"IRAs and Saving,"
NBER Working Papers
1879, National Bureau of Economic Research, Inc.
- Daniel Feenberg & Jonathan Skinner, 1989.
"Sources of IRA Saving,"
in: Tax Policy and the Economy, Volume 3, pages 25-46
National Bureau of Economic Research, Inc.
- 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.
- Bovenberg, A. Lans, 1989. "Tax Policy and National Saving in the United States: A Survey," National Tax Journal, National Tax Association, vol. 42(2), pages 123-38, June Cita.
- 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.
- James M. Poterba & Steven F. Venti & David A. Wise, 1996. "Do 401(k) Contributions Crowd Out Other Persoanl Saving?," NBER Working Papers 4391, National Bureau of Economic Research, Inc.
- 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.
- Bovenberg, A.L., 1989. "Tax policy and national savings in the United States: A survey," Open Access publications from Tilburg University urn:nbn:nl:ui:12-152950, Tilburg University.
- Jane G. Gravelle, 1991. "Do Individual Retirement Accounts Increase Savings?," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 133-148, Spring.
- Axel Börsch-Supan, 2002. "What We Know and What We Do NOT Know," MEA discussion paper series 02017, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
- R. Glenn Hubbard & Jonathan S. Skinner, 2009.
"Assessing the Effectiveness of Savings Incentives,"
American Enterprise Institute, number 24067, 11.
- Eric M. Engen & William G. Gale & John Karl Scholz, 1996. "The Effects of Tax-Based Saving Incentives On Saving and Wealth," NBER Working Papers 5759, National Bureau of Economic Research, Inc.
- B. Douglas Bernheim, 1999.
"Taxation and Saving,"
99007, Stanford University, Department of Economics.
- Axel Börsch-Supan, 2004. "Mind the Gap: The Effectiveness of Incentives to boost Retirement Saving in Europe," MEA discussion paper series 04052, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
- James M. Poterba & Steven F. Venti & David A. Wise, 1996. "How Retirement Saving Programs Increase Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 91-112, Fall.
- Eric M. Engen & William G. Gale & John Karl Scholz, 1996. "The Illusory Effects of Saving Incentives on Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 113-138, Fall.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.