Advanced Search
MyIDEAS: Login to save this paper or follow this series

Income and Wealth of Older American Households: Modeling Issues for Public Policy Analysis

Contents:

Author Info

  • Alan L. Gustman
  • F. Thomas Juster

Abstract

This paper evaluates the extent to which current knowledge of retirement, savings, pension and related behavior is sufficient for determining the effects of major policy initiatives on the incomes and wealth of the aged population of the United States. Data are presented from two new surveys, the Health and Retirement Study and the Asset and Health Dynamics Among the Oldest Old Survey, describing the distributions of the major components of income and wealth to be explained by these behavioral models. The data suggest that the amount of wealth held by the older population has been severely understated in earlier surveys. Disagreements and inconsistencies in models of savings indicate that there is no agreed upon behavioral model upon which to base policy analysis. Similar problems characterize the pension literature. Most strikingly, central features of these three major branches of behavioral analysis are mutually inconsistent. Although there are important linkages among the behaviors determining retirement, savings and pension outcomes, research in each area ignores or misspecifies the related behavior from other areas. Consequently, significant advances are required before we can confidently predict the effects of contemplated changes in policies on income and wealth in retirement.

Download Info

If 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.
File URL: http://www.nber.org/papers/w4996.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4996.

as in new window
Length:
Date of creation: Jan 1995
Date of revision:
Publication status: published as in Eric Hanushek and Nancy L. Maritato, eds., Assessing Knowledge of Retirement Behavior, National Academy Press, Washington, DC 1996, pp.11-60
Handle: RePEc:nbr:nberwo:4996

Note: AG LS
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Find related papers by JEL classification:

References

References listed on IDEAS
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.:
as in new window
  1. Alan Gustman & Thomas Steinmeier, 1990. "Pension Portability and Labor Mobility: Evidence From the Survey of Income and Program Participation," NBER Working Papers 3525, National Bureau of Economic Research, Inc.
  2. Juster, F Thomas & Stafford, Frank P, 1991. "The Allocation of Time: Empirical Findings, Behavioral Models, and Problems of Measurement," Journal of Economic Literature, American Economic Association, vol. 29(2), pages 471-522, June.
  3. Chris Carroll & Lawrence H. Summers, 1989. "Consumption Growth Parallels Income Growth: Some New Evidence," NBER Working Papers 3090, National Bureau of Economic Research, Inc.
  4. Alicia H. Munnell & Frederick O. Yohn, 1991. "What is the impact of pensions on saving?," Working Papers, Federal Reserve Bank of Boston 91-5, Federal Reserve Bank of Boston.
  5. Kotlikoff, Laurence J & Spivak, Avia, 1981. "The Family as an Incomplete Annuities Market," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(2), pages 372-91, April.
  6. David E. Bloom & Richard B. Freeman, 1992. "The Fall in Private Pension Coverage in the U.S," NBER Working Papers 3973, National Bureau of Economic Research, Inc.
  7. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1986. "The Strategic Bequest Motive," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 4(3), pages S151-82, July.
  8. Kathleen McGarry & Robert F. Schoeni, 1994. "Transfer Behavior: Measurement and the Redistribution of Resources within the Family," NBER Working Papers 4607, National Bureau of Economic Research, Inc.
  9. Olivia S. Mitchell, 1987. "Worker Knowledge of Pension Provisions," NBER Working Papers 2414, National Bureau of Economic Research, Inc.
  10. Burtless, Gary & Moffitt, Robert A, 1985. "The Joint Choice of Retirement Age and Postretirement Hours of Work," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 3(2), pages 209-36, April.
  11. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
  12. Rebecca A. Luzadis & Olivia S. Mitchell, 1991. "Explaining Pension Dynamics," Journal of Human Resources, University of Wisconsin Press, vol. 26(4), pages 679-703.
  13. Bodie, Zvi, 1990. "Pensions as Retirement Income Insurance," Journal of Economic Literature, American Economic Association, vol. 28(1), pages 28-49, March.
  14. Carroll, Christopher D. & Samwick, Andrew A., 1997. "The nature of precautionary wealth," Journal of Monetary Economics, Elsevier, Elsevier, vol. 40(1), pages 41-71, September.
  15. Axel Börsch-Supan, 1989. "Household Dissolution and the Choice of Alternative Living Arrangements among Elderly Americans," NBER Chapters, in: The Economics of Aging, pages 119-150 National Bureau of Economic Research, Inc.
  16. Michael D. Hurd & David A. Wise, 1989. "The Wealth and Poverty of Widows: Assets Before and After the Husband's Death," NBER Chapters, in: The Economics of Aging, pages 177-200 National Bureau of Economic Research, Inc.
  17. James M. Poterba & Steven F. Venti & David A. Wise, 1993. "Do 401(k) Contributions Crowd Out Other Persoanl Saving?," NBER Working Papers 4391, National Bureau of Economic Research, Inc.
  18. Peracchi, Franco & Welch, Finis, 1994. "Trends in Labor Force Transitions of Older Men and Women," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 12(2), pages 210-42, April.
  19. Blau, David M, 1994. "Labor Force Dynamics of Older Men," Econometrica, Econometric Society, Econometric Society, vol. 62(1), pages 117-56, January.
  20. Zeldes, Stephen P, 1989. "Consumption and Liquidity Constraints: An Empirical Investigation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(2), pages 305-46, April.
  21. B. Douglas Bernheim, 1987. "Social Security Benefits: An Empirical Study of Expectations and Realizations," NBER Working Papers 2257, National Bureau of Economic Research, Inc.
  22. Lupton, J. & Smith, J.P., 1999. "Marriage, Assets, and Savings," Papers, RAND - Labor and Population Program 99-12, RAND - Labor and Population Program.
  23. Guiso, Luigi & Jappelli, Tullio & Terlizzese, Daniele, 1992. "Earnings Uncertainty and Precautionary Saving," CEPR Discussion Papers, C.E.P.R. Discussion Papers 699, C.E.P.R. Discussion Papers.
  24. Philip Cagan, 1965. "The Effect of Pension Plans on Aggregate Saving: Evidence from a Sample Survey," NBER Books, National Bureau of Economic Research, Inc, number caga65-2.
  25. Gale, William G & Scholz, John Karl, 1994. "IRAs and Household Saving," American Economic Review, American Economic Association, American Economic Association, vol. 84(5), pages 1233-60, December.
  26. Olivia S. Mitchell & Rebecca A. Luzadis, 1988. "Changes in pension incentives through time," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 42(1), pages 100-108, October.
  27. Berkovec, James & Stern, Steven, 1991. "Job Exit Behavior of Older Men," Econometrica, Econometric Society, Econometric Society, vol. 59(1), pages 189-210, January.
  28. David A. Wise & Robin L. Lumsdaine, 1990. "Aging and Labor Force Participation: A Review of Trends and Explanations," NBER Working Papers 3420, National Bureau of Economic Research, Inc.
  29. Richard V. Burkhauser, 1979. "The Pension Acceptance Decision of Older Workers," Journal of Human Resources, University of Wisconsin Press, vol. 14(1), pages 63-75.
  30. Martin Feldstein, 1987. "The Effects of Taxation on Capital Accumulation," NBER Books, National Bureau of Economic Research, Inc, number feld87-1.
  31. Steven F. Venti & David A. Wise, 1986. "IRAs and Saving," NBER Working Papers 1879, National Bureau of Economic Research, Inc.
    • 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.
  32. Hubbard, R Glenn & Skinner, Jonathan & Zeldes, Stephen P, 1994. "Expanding the Life-Cycle Model: Precautionary Saving and Public Policy," American Economic Review, American Economic Association, American Economic Association, vol. 84(2), pages 174-79, May.
  33. Lumsdaine, Robin L. & Stock, James H. & Wise, David A., 1990. "Efficient windows and labor force reduction," Journal of Public Economics, Elsevier, Elsevier, vol. 43(2), pages 131-159, November.
  34. Parsons, Donald O, 1980. "The Decline in Male Labor Force Participation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 88(1), pages 117-34, February.
  35. Bernheim, B.D. & Scholz, J.K., 1992. "Private Saving and Public Policy," Working papers, Wisconsin Madison - Social Systems 9226, Wisconsin Madison - Social Systems.
  36. John Rust, 1987. "A Dynamic Programming Model of Retirement Behavior," NBER Working Papers 2470, National Bureau of Economic Research, Inc.
  37. Abel, Andrew B, 1985. "Precautionary Saving and Accidental Bequests," American Economic Review, American Economic Association, American Economic Association, vol. 75(4), pages 777-91, September.
  38. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(6), pages 1261-84, December.
  39. Modigliani, Franco, 1988. "The Role of Intergenerational Transfers and Life Cycle Saving in the Accumulation of Wealth," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 2(2), pages 15-40, Spring.
  40. Woodbury, Stephen A, 1983. "Substitution between Wage and Nonwage Benefits," American Economic Review, American Economic Association, American Economic Association, vol. 73(1), pages 166-82, March.
  41. Louise Sheiner & David N. Weil, 1992. "The Housing Wealth of the Aged," NBER Working Papers 4115, National Bureau of Economic Research, Inc.
  42. Gary S. Fields & Olivia S. Mitchell, 1984. "Retirement, Pensions, and Social Security," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262060914, December.
  43. Richard A. Ippolito, 1983. "Public Policy Towards Private Pensions," Contemporary Economic Policy, Western Economic Association International, vol. 1(3), pages 53-76, 04.
  44. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, Econometric Society, vol. 65(4), pages 781-832, July.
  45. Robert E. Hall & Frederic S. Mishkin, 1980. "The Sensitivity of Consumption to Transitory Income: Estimates from Panel Data on Households," NBER Working Papers 0505, National Bureau of Economic Research, Inc.
  46. James H. Stock & David A. Wise, 1990. "The Pension Inducement to Retire: An Option Value Analysis," NBER Chapters, in: Issues in the Economics of Aging, pages 205-230 National Bureau of Economic Research, Inc.
  47. B. Douglas Bernheim & John B. Shoven, 1991. "National Saving and Economic Performance," NBER Books, National Bureau of Economic Research, Inc, number bern91-2.
  48. Borsch-Supan, Axel H & Stahl, Konrad, 1991. "Life Cycle Savings and Consumption Constraints: Theory, Empirical Evidence, and Fiscal Implications," Journal of Population Economics, Springer, Springer, vol. 4(3), pages 233-55, August.
  49. Jonathan Feinstein & Daniel McFadden, 1987. "The Dynamics of Housing Demand by the Elderly: Wealth, Cash Flow, and Demographic Effects," NBER Working Papers 2471, National Bureau of Economic Research, Inc.
  50. Alan L. Gustman & Olivia S. Mitchell & Thomas L. Steinmeier, 1994. "Retirement Research Using the Health and Retirement Survey," NBER Working Papers 4813, National Bureau of Economic Research, Inc.
  51. Alan L. Gustman & Thomas L. Steinmeier, 1982. "Minimum Hours Constraints and Retirement Behavior," NBER Working Papers 0940, National Bureau of Economic Research, Inc.
  52. Jonathan S. Skinner, 1987. "Risky Income, Life Cycle Consumption, and Precautionary Savings," NBER Working Papers 2336, National Bureau of Economic Research, Inc.
  53. Christopher D. Carroll, 1992. "The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 61-156.
  54. Hurd, Michael D, 1987. "Savings of the Elderly and Desired Bequests," American Economic Review, American Economic Association, American Economic Association, vol. 77(3), pages 298-312, June.
  55. Stephen A. Woodbury & Wei-Jang Huang, 1991. "The Tax Treatment of Fringe Benefits," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, W.E. Upjohn Institute for Employment Research, number ttfb.
  56. Parsons, Donald O., 1991. "The decline in private pension coverage in the United States," Economics Letters, Elsevier, Elsevier, vol. 36(4), pages 419-423, August.
  57. Jerry R. Green, 1985. "The Riskiness of Private Pensions," NBER Chapters, in: Pensions, Labor, and Individual Choice, pages 357-378 National Bureau of Economic Research, Inc.
  58. Daniel S. Hamermesh, 1982. "Consumption During Retirement: The Missing Link in the Life Cycle," NBER Working Papers 0930, National Bureau of Economic Research, Inc.
  59. Kotlikoff, Laurence J, 1988. "Intergenerational Transfers and Savings," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 2(2), pages 41-58, Spring.
  60. Steven G. Allen & Robert L. Clark & Daniel A. Sumner, 1984. "Post-Retirement Adjustments of Pension Benefits," NBER Working Papers 1364, National Bureau of Economic Research, Inc.
  61. Christopher J. Ruhm, 1995. "Secular Changes in the Work and Retirement Patterns of Older Men," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 362-385.
  62. Richard A. Ippolito, 1987. "The Implicit Pension Contract: Developments and New Directions," Journal of Human Resources, University of Wisconsin Press, vol. 22(3), pages 441-467.
  63. Reimers, Cordelia & Honig, Marjorie, 1993. "The Perceived Budget Constraint under Social Security: Evidence from Reentry Behavior," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 11(1), pages 184-204, January.
  64. Michael Hurd & Kathleen McGarry, 1993. "The Relationship Between Job Characteristics and Retirement," NBER Working Papers 4558, National Bureau of Economic Research, Inc.
  65. Hutchens, Robert, 1986. "Delayed Payment Contracts and a Firm's Propensity to Hire Older Workers," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 4(4), pages 439-57, October.
  66. Steven G. Allen & Robert L. Clark & Ann A. McDermed, 1993. "Pensions, Bonding, and Lifetime Jobs," Journal of Human Resources, University of Wisconsin Press, vol. 28(3), pages 463-481.
  67. Alan L. Gustman & Thomas L. Steinmeier, 1994. "Retirement in a Family Context: A Structural Model for Husbands and Wives," NBER Working Papers 4629, National Bureau of Economic Research, Inc.
  68. Alan M. Garber & Thomas E. MaCurdy, 1990. "Predicting Nursing Home Utilization among the High-Risk Elderly," NBER Chapters, in: Issues in the Economics of Aging, pages 173-204 National Bureau of Economic Research, Inc.
  69. Steven Stern & Petra Todd, 2000. "A Test Of Lazear’S Mandatory Retirement Model," Virginia Economics Online Papers 391, University of Virginia, Department of Economics.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Siu Fai Leung, 2000. "Why Do Some Households Save So Little? A Rational Explanation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(4), pages 771-800, October.
  2. Alan L. Gustman & Thomas L. Steinmeier, 1999. "What People Don't Know About Their Pensions and Social Security: An Analysis Using Linked Data from the Health and Retirement Study," NBER Working Papers 7368, National Bureau of Economic Research, Inc.
  3. Alan L. Gustman & Thomas L. Steinmeier, 1998. "Social Security Benefits of Immigrants and U.S. Born," NBER Working Papers 6478, National Bureau of Economic Research, Inc.
  4. Alan L. Gustman & Thomas L. Steinmeier, 2002. "The Social Security Early Entitlement Age in a Structural Model of Retirement and Wealth," NBER Working Papers 9183, National Bureau of Economic Research, Inc.
  5. Alan L. Gustman & Olivia S. Mitchell & Andrew A. Samwick & Thomas L. Steinmeier, 1997. "Pension and Social Security Wealth in the Health and Retirement Study," NBER Working Papers 5912, National Bureau of Economic Research, Inc.
  6. Alan L. Gustman & Thomas L. Steinmeier, 2002. "Retirement and the Stock Market Bubble," NBER Working Papers 9404, National Bureau of Economic Research, Inc.
  7. Rudolph G. Penner & Richard W. Johnson, 2006. "Health Care Costs, Taxes, and the Retirement Decision: Conceptual Issues and Illustrative Simulation," Working Papers, Center for Retirement Research at Boston College wp2006-20, Center for Retirement Research, revised Nov 2006.
  8. Olivia S. Mitchell & James F. Moore, 1997. "Retirement Wealth Accumulation and Decumulation: New Developments and Outstanding Opportunities," Center for Financial Institutions Working Papers, Wharton School Center for Financial Institutions, University of Pennsylvania 97-12, Wharton School Center for Financial Institutions, University of Pennsylvania.
  9. Alan L. Gustman & Thomas L. Steinmeier, 2001. "Retirement and Wealth," NBER Working Papers 8229, National Bureau of Economic Research, Inc.
  10. Alan L. Gustman & Thomas L. Steinmeier, 2001. "Imperfect Knowledge, Retirement and Saving," Working Papers, University of Michigan, Michigan Retirement Research Center wp012, University of Michigan, Michigan Retirement Research Center.
  11. Patricia M. Anderson & Alan L. Gustman & Thomas L. Steinmeier, 1997. "Trends in Male Labor Force Participation And Retirement: Some Evidence On The Role Of Pensions And Social Security In The 1970's And 1980's," NBER Working Papers 6208, National Bureau of Economic Research, Inc.
  12. Mellor, Jennifer M., 2001. "Long-term care and nursing home coverage: are adult children substitutes for insurance policies?," Journal of Health Economics, Elsevier, Elsevier, vol. 20(4), pages 527-547, July.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:4996. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.