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October 2023

Determinants of Portfolio ESG Performance: An Attribution Framework

By James J. Li We develop a parsimonious attribution framework for evaluating the ESG performance of a portfolio. Our attribution model decomposes portfolio ESG performance into three principal components: a value effect, a weighting effect, and an interaction effect. We illustrate our approach using the equity portfolios of U.S. public pension funds over time. We find that U.S. public pensions’ positive ESG performance over the past decade is mainly due to their underlying holdings boosting their ESG scores over this...

Preparing for an Aging Africa: Data-Driven Priorities for Economic Research and Policy

By Madeline E. Duhon, Edward Miguel, Amos Njuguna, Daniela Pinto Veizaga & Michael W. Walker The over-60 population in Sub-Saharan Africa is expected to grow rapidly in the coming decades, tripling between 2020 and 2050. Despite this explosive projected growth, few countries in the region have implemented policies designed to support older populations. Further, little research in economics has specifically examined aging in Sub-Saharan Africa, though many opportunities exist for economists to generate research evidence to inform the design of...

Understanding Financial Vulnerability Among Asians, Blacks, and Hispanics in the United States

By Andrea Hasler, Annamaria Lusardi, Olivia S. Mitchell & Alessia Sconti The COVID-19 crisis has brought to light the deeply rooted financial struggles that many people face in America, and it also exacerbated racial inequality. In particular, minority communities have been disproportionately impacted by the pandemic in many ways, making them ideal targets for efforts to promote financial well-being. This paper examines the financial vulnerability of Asians, Blacks, and Hispanics in the United States, along with potential drivers, using data...

Artificial Intelligence Policy: A Primer and Roadmap

By Ryan Calo Talk of artificial intelligence is everywhere. People marvel at the capacity of machines to translate any language and master any game. Others condemn the use of secret algorithms to sentence criminal defendants or recoil at the prospect of machines gunning for blue, pink, and white-collar jobs. Some worry aloud that artificial intelligence will be humankind’s “final invention.” This essay, prepared in connection with UC Davis Law Review's 50th anniversary symposium, explains why AI is suddenly on everyone's mind and...

Understanding Trends in Hispanic and African American Retirement Preparedness in the US

By Edward Nathan Wolff  Retirement income security refers to households’ ability to provide an adequate income stream during the period of their retirement from the labor force. Expected retirement income is based on four components: standard wealth holdings, defined contribution pensions, defined benefit pensions, and social security benefits. Using the Survey of Consumer Finances, I find that Black and Hispanic households made remarkable progress in terms of retirement income, poverty reduction, and replacement rates over 1989-2007. This was followed by...

The Role of Disability Insurance on the Labour Market Trajectories of Europeans

By Agar Brugiavini & Petru Crudu  This work documents the role played by disability insurance, typically part of a wider public pension provision package, on the labour market trajectories and retirement decisions. We will first employ a machine learning approach to estimate a Transition Probability Model able to uncover the most likely labour market histories and then evaluate the effects of policy reforms, including reforms to the eligibility for disability insurance benefits. The main contribution is the introduction of disability...

Replacement Rates and the Retirement Crisis

By Andrew G. Biggs  In 2014, the annual Social Security Trustees Report removed measures of Social Security replacement rates, which represent Social Security retirement benefits as a percentage of pre-retirement earnings. The Trustees expressed concerns that the Social Security Administration’s (SSA) actuaries’ methodology produced results that differed meaningfully from other common approaches. In 2023, the Social Security Trustees returned replacement rates to the report, without changes to the SSA methodology or discussion of their decision. The SSA replacement rate methodology produces...

September 2023

Motivated Saving: The Impact of Projections on Retirement Contributions

By George Smyrnis, Hazel Bateman, Loretti Dobrescu, Ben R. Newell & Susan Throp Projections of future benefits can assist pension plan participants prepare for retirement. Here we measure the effects of projections of retirement incomes and lump sum balances on voluntary contributions and plan interactions of retirement savers. Data from a two-year field trial in a large Australian pension plan show that the frequency and average amount of participants’ voluntary contributions and interactions with the plan rose significantly in the...

Best Practices for Defined Contribution Plans

By Nicole M. Boyson This paper provides operational and investment recommendations for ERISA 403(b) plans. Based on a review of academic literature and an empirical analysis, I recommend that plan investment menus include mostly passive index funds covering key investment categories, a full suite of index-based target date funds as the auto-enroll qualified default investment alternative, and a self-directed brokerage option. I also recommend that plan sponsors adhere to and regularly review the plan’s Investment Policy Statement, that the Retirement...

Does a Requirement to Offer Retirement Plans Help Low-Income Workers Save for Retirement? Early Evidence from the OregonSaves Program

By Ngoc Dao  This study examines the first implementation of the state-run retirement savings program in Oregon, known as OregonSaves, in 2017. It offers early insights into the substantial impact of this mandated program on retirement savings among previously uncovered private workers. Results from difference-in-difference models using SIPP data indicate a 12 percent increase in Individual Retirement Account (IRA) ownership among Oregon workers after the program’s roll-out. Notably, the study discerns significant gains for lower-income, single, and older workers, as...