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Using Stated Preferences Data to Analyze Preferences for Full and Partial Retirement

Author

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  • Arthur van Soest
  • Arie Kapteyn
  • Julie Zissimopoulos

Abstract

Structural models explaining retirement decisions of individuals or households in an inter-temporal setting are typically hard to estimate using data on actual retirement decisions, because choice sets are complicated and uncertain and for a large part unobserved by the researcher. This paper describes an experiment in which both perceived retirement opportunities and preferences for retirement are measured. For the latter, respondents evaluate how attractive they find a number of hypothetical, simplified, retirement trajectories involving early retirement, late retirement, and gradual retirement, each with its own corresponding income path. The questions were fielded in the Dutch CentERpanel. The answers are used to estimate a stylized structural life-cycle model of retirement preferences. The results suggest that, for example, many respondents could be convinced to work part-time after age 65 before retiring completely at age 70 for a reasonable financial compensation. Simulations combining the information on perceived opportunities with estimated preferences also illustrate the importance of employer imposed restrictions on retirement and the scope for increasing labor force participation of the elderly by creating opportunities for gradual retirement.

Suggested Citation

  • Arthur van Soest & Arie Kapteyn & Julie Zissimopoulos, 2006. "Using Stated Preferences Data to Analyze Preferences for Full and Partial Retirement," DNB Working Papers 081, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:dnbwpp:081
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    References listed on IDEAS

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    1. Lumsdaine, Robin L. & Mitchell, Olivia S., 1999. "New developments in the economic analysis of retirement," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 49, pages 3261-3307 Elsevier.
    2. Robert B. Barsky & Miles S. Kimball & F. Thomas Juster & Matthew D. Shapiro, 1995. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Survey," NBER Working Papers 5213, National Bureau of Economic Research, Inc.
    3. Michael D. Hurd, 1993. "The Effect of Labor Market Rigidities on the Labor Force Behavior of Older Workers," NBER Working Papers 4462, National Bureau of Economic Research, Inc.
    4. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-1180, September.
    5. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, vol. 65(4), pages 781-832, July.
    6. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, November.
    7. Denis LATULIPPE & John TURNER, 2000. "Partial retirement and pension policy in industrialized countries," International Labour Review, International Labour Organization, vol. 139(2), pages 179-195, June.
    8. David Revelt & Kenneth Train, 1998. "Mixed Logit With Repeated Choices: Households' Choices Of Appliance Efficiency Level," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 647-657, November.
    9. Robert B. Barsky & F. Thomas Juster & Miles S. Kimball & Matthew D. Shapiro, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 537-579.
    10. Euwals, Rob & Eymann, Angelika & Borsch-Supan, Axel, 2004. "Who determines household savings for old age? Evidence from Dutch panel data," Journal of Economic Psychology, Elsevier, vol. 25(2), pages 195-211, April.
    11. Hurd, Michael D, 1990. "Research on the Elderly: Economic Status, Retirement, and Consumption and Saving," Journal of Economic Literature, American Economic Association, pages 565-637.
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    Citations

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    Cited by:

    1. Vonkova, H., 2011. "The use of subjective survey data : Anchorine vignettes and stated preference methods," Other publications TiSEM dfe0c93f-a3e7-48ad-802f-e, Tilburg University, School of Economics and Management.
    2. Frank van Erp & Paul de Hek, 2009. "Analyzing labour supply of elderly people: a life-cycle approach," CPB Document 179, CPB Netherlands Bureau for Economic Policy Analysis.
    3. 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.
    4. Elsayed A.E.A. & Grip A. de & Fouarge D. & Montizaan R.M., 2015. "Gradual retirement, financial incentives, and labour supply of older workers: Evidence from a stated preference analysis," Research Memorandum 030, Maastricht University, Graduate School of Business and Economics (GSBE).
    5. Andries de Grip & Didier Fouarge & Raymond Montizaan, 2013. "How Sensitive are Individual Retirement Expectations to Raising the Retirement Age?," De Economist, Springer, pages 225-251.
    6. Andre Palma & Moshe Ben-Akiva & David Brownstone & Charles Holt & Thierry Magnac & Daniel McFadden & Peter Moffatt & Nathalie Picard & Kenneth Train & Peter Wakker & Joan Walker, 2008. "Risk, uncertainty and discrete choice models," Marketing Letters, Springer, vol. 19(3), pages 269-285, December.
      • André de Palma & Moshe Ben-Akiva & David Brownstone & Charles Holt & Thierry Magnac & Daniel McFadden & Peter Moffatt & Nathalie Picard & Kenneth Train & Peter Wakker & Joan Walker, 2008. "Risk, Uncertainty and Discrete Choice Models," THEMA Working Papers 2008-02, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    7. Allard Bruinshoofd & Sybille Grob, 2006. "Do changes in pension incentives affect retirement? A stated preferences approach to Dutch retirement consideration," DNB Working Papers 115, Netherlands Central Bank, Research Department.
    8. Tunga Kantarci & Arthur Soest, 2008. "Gradual Retirement: Preferences and Limitations," De Economist, Springer, pages 113-144.
    9. Ulrike Famira-Mühlberger & Ulrike Huemer & Christine Mayrhuber, 2015. "The Impact of Social Security Systems on the Employment Rate of the Elderly in Traditional Welfare States," WIFO Working Papers 499, WIFO.
    10. Songül Tolan, 2015. "Die Flexibilisierung des Rentenübergangs in Deutschland," DIW Roundup: Politik im Fokus 82, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    Replacement rates; Ratings; Gradual retirement;

    JEL classification:

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

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