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Assessing the Effectiveness of Saving Incentives

  • R. Glenn Hubbard
  • Jonathan S. Skinner

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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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. B. Douglas Bernheim & John B. Shoven, 1991. "National Saving and Economic Performance," NBER Books, National Bureau of Economic Research, Inc, number bern91-2.
  2. Gale, William G & Scholz, John Karl, 1994. "IRAs and Household Saving," American Economic Review, American Economic Association, vol. 84(5), pages 1233-60, December.
  3. 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.
  4. 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.
  5. Robert G. King & Sergio Rebelo, 1990. "Public Policy and Economic Growth: Developing Neoclassical Implications," NBER Working Papers 3338, National Bureau of Economic Research, Inc.
  6. Martin Feldstein & Daniel Feenberg, 1981. "Alternative Tax Rules and Personal Savings Incentives: Microeconomic Data and Behavioral Simulations," NBER Working Papers 0681, National Bureau of Economic Research, Inc.
  7. Hubbard, R. Glenn & Skinner, Jonathan & Zeldes, Stephen P., 1994. "The importance of precautionary motives in explaining individual and aggregate saving," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 59-125, June.
  8. James M. Poterba & Steven F. Venti & David A. Wise, 1992. "401(k) Plans and Tax-Deferred Saving," NBER Working Papers 4181, National Bureau of Economic Research, Inc.
  9. Steven F. Venti & David A. Wise, 1990. "Have IRAs Increased U. S. Saving?: Evidence from Consumer Expenditure Surveys," The Quarterly Journal of Economics, Oxford University Press, vol. 105(3), pages 661-698.
  10. 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.
  11. 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.
  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. B. Douglas Bernheim, 1996. "Rethinking Saving Incentives," Working Papers 96009, Stanford University, Department of Economics.
  14. 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.
  15. 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.).
  16. Steven F. Venti & David A. Wise, 1985. "The Determinants of IRA Contributions and the Effect of Limit Changes," NBER Working Papers 1731, National Bureau of Economic Research, Inc.
  17. 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.
  18. Posner, Richard A., 1995. "Aging and Old Age," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226675664, July.
  19. 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.
  20. N/A, 1985. "General Policy," India Quarterly: A Journal of International Affairs, , vol. 41(1), pages 112-117.
  21. Thaler, Richard H, 1994. "Psychology and Savings Policies," American Economic Review, American Economic Association, vol. 84(2), pages 186-92, May.
  22. 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.
  23. Kevin A. Hassett & R. Glenn Hubbard, 1996. "Tax Policy and Investment," NBER Working Papers 5683, National Bureau of Economic Research, Inc.
  24. 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.
  25. Steven F. Venti & David A. Wise, 1986. "Tax-Deferred Accounts, Constrained Choice and Estimation of Individual Saving," Review of Economic Studies, Oxford University Press, vol. 53(4), pages 579-601.
  26. N/A, 1985. "General Policy," India Quarterly: A Journal of International Affairs, , vol. 41(1), pages 74-79.
  27. Martin Feldstein, 1995. "The Effects of Tax-Based Saving Incentives on Government Revenue and National Saving," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 475-494.
  28. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  29. 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.
  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.
  31. 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.
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