IDEAS home Printed from
   My bibliography  Save this paper

The Effects of IRAs on Household Consumption and National Saving


  • Orazio P. Attanasio
  • Thomas DeLeire


A major debate exists on whether expanding tax-favored savings accounts such as Individual Retirement Accounts (IRAs) will increase national savings. Much of the empirical debate on this question has centered on whether IRA contributions before the Tax Reform Act of 1986 represented new savings or merely reshuffled assets. We present a novel test between these two possibilities; we compare the consumption growth of households which had just opened an IRA account with that of households which already had invested in an IRA. We find no evidence that households financed their IRA contributions from reductions in consumption, at least in the first nine months after participation into an IRA plan starts. We also present a test based on changes in the non-IRA asset balances for these two groups of households and find evidence that households financed their IRA contributions from existing savings or from saving that would have been done anyway. While the assets based test is subject to a number of caveats, taken together our results indicate that only a small fraction of IRA contributions made by new contributors represented net additions to national saving.

Suggested Citation

  • Orazio P. Attanasio & Thomas DeLeire, 1999. "The Effects of IRAs on Household Consumption and National Saving," Working Papers 9908, Harris School of Public Policy Studies, University of Chicago.
  • Handle: RePEc:har:wpaper:9908

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    IRA; saving; retirement; household consumption;


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:har:wpaper:9908. 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: (Eleanor Cartelli). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.