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How Sensitive Are Retirement Decisions To Financial Incentives? A Stated Preference Analysis

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  • Arthur Van Soest
  • Hana Vonkova

Abstract

SUMMARY We study the effects of financial incentives on retirement decisions using stated preference data. Dutch survey respondents were given hypothetical retirement scenarios describing age(s) of (partial and full) retirement and replacement rate(s). A stylized model is estimated in which utility is the discounted sum of within‐period utilities that depend on employment status and income. Parameters of the utility function vary with observed and unobserved characteristics. Simulations show that the income and substitution effects of pensions as a function of the retirement age are substantial and larger than according to studies using data on actual retirement decisions in the Netherlands. Copyright © 2013 John Wiley & Sons, Ltd.

Suggested Citation

  • Arthur Van Soest & Hana Vonkova, 2014. "How Sensitive Are Retirement Decisions To Financial Incentives? A Stated Preference Analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(2), pages 246-264, March.
    • Handle: RePEc:wly:japmet:v:29:y:2014:i:2:p:246-264
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    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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