IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Personal Retirement Saving Programs and Asset Accumulation: Reconciling the Evidence

  • James M. Poterba
  • Steven F. Venti
  • David A. Wise

Over the past several years, we have undertaken a series of analysies of the effect of IRA and 401(k) contributions on net personal saving. Saver hetero- geneity is the key impediment to determining the saving effect of these plans We emphasize that no single method can provide sure control for all forms of heterogeneity. Taken together, however, we believe that the analyses address the key complications presented by heterogeneity. In our view, the weight of the evidence, based on the many non-parametric approaches discussed here provides strong support for the view that contributions to IRA and 401(k) represent largely new saving. Some of the evidence is directed to the IRA program, some to the 401(k) plan, and some to both plans. Several other investigators have used different methods to consider the effect of these retirement saving programs on personal saving and in some cases have reached very different conclusions from ours. Thus we have devoted particular effort to trying to reconcile the results, explaining why different approaches, sometimes based on the same data, have led to different conclusions. In some instances, we believe the limitations of the methods used by others have undermined the reliability of the results. Particular attention is devoted to a recent paper by Gale and Scholz [1994] that is widely cited as demonstrating that IRAs have no saving effect. Based on our analysis of the data used by Gale and Scholz, we find that their conclusions are inconsistent with the raw data and their formal model does not provide reliable information on the extent of substitution.

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/w5599.pdf
Download Restriction: no

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5599.

as
in new window

Length:
Date of creation: May 1996
Date of revision:
Publication status: published as Journal of Economic Perspectives, vol. 10, no. 4, pp. 91-112, Fall 1996.
Handle: RePEc:nbr:nberwo:5599
Note: AG PE
Contact details of provider: Postal:
National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.

Phone: 617-868-3900
Web page: http://www.nber.org
Email:


More information through EDIRC

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. 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.
  2. Hoch, Stephen J & Loewenstein, George F, 1991. " Time-Inconsistent Preferences and Consumer Self-Control," Journal of Consumer Research, Oxford University Press, vol. 17(4), pages 492-507, March.
  3. Shapiro, Matthew D & Slemrod, Joel, 1995. "Consumer Response to the Timing of Income: Evidence from a Change in Tax Withholding," American Economic Review, American Economic Association, vol. 85(1), pages 274-83, March.
  4. 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.
  5. David I. Laibson, 1996. "Hyperbolic Discount Functions, Undersaving, and Savings Policy," NBER Working Papers 5635, National Bureau of Economic Research, Inc.
  6. Samuelson, William & Zeckhauser, Richard, 1988. "Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
  7. Colin Camerer & Linda Babcock & George Loewenstein & Richard Thaler, 1997. "Labor Supply of New York City Cabdrivers: One Day at a Time," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 407-441.
  8. David A. Wise, 1987. "Individual Retirement Accounts and Saving," NBER Chapters, in: Taxes and Capital Formation, pages 3-16 National Bureau of Economic Research, Inc.
  9. Laurence J. Kotlikoff & David A. Wise, 1985. "Labor Compensation and the Structure of Private Pension Plans: Evidence for Contractual versus Spot Labor Markets," NBER Chapters, in: Pensions, Labor, and Individual Choice, pages 55-88 National Bureau of Economic Research, Inc.
  10. Loewenstein, George F & Sicherman, Nachum, 1991. "Do Workers Prefer Increasing Wage Profiles?," Journal of Labor Economics, University of Chicago Press, vol. 9(1), pages 67-84, January.
  11. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
  12. Burman, Leonard E. & Cordes, Joseph J. & Ozanne, Larry, 1990. "IRAs and National Savings," National Tax Journal, National Tax Association, vol. 43(3), pages 259-83, September.
  13. 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.
  14. Jonathan Skinner & Daniel Feenberg, 1990. "The Impact of the 1986 Tax Reform Act on Personal Saving," NBER Working Papers 3257, National Bureau of Economic Research, Inc.
  15. Zeckhauser, Richard, 1986. "Behavioral versus Rational Economics: What You See Is What You Conquer: Comments," The Journal of Business, University of Chicago Press, vol. 59(4), pages S435-49, October.
Full references (including those not matched with items on IDEAS)

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

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:5599. 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.