March 2017
17Mar

Understanding the Determinants of Financial Outcomes and Choices: The Role of Noncognitive Abilities

By Gianpaolo Parise (Bank for International Settlements) & Kim Peijnenburg (Netspar) We explore how financial distress and choices are affected by non cognitive abilities. Our measures stem from research in psychology and economics. In a representative panel of households, we find people in the bottom decile of non cognitive abilities are five times more likely to experience financial distress compared to those in the top decile. (more…)

March 17, 2017
Articles, Investing, Labor Market, Savings, ,
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17Mar

Amicus Brief of National Employment Lawyers Association in Advocate Health Care Network v. Stapleton

By Matthew C. Koski, Brian Wolfman (Georgetown University) & Wyatt Gregory Sassman (Charleston School of Law) The Employee Retirement Income Security Act of 1974 (ERISA) governs the conduct of employers that offer pensions and certain other benefits to their employees. In enacting the law, “Congress’s primary concern was with the mismanagement of funds accumulated to finance employee benefits and the failure to pay employees benefits from accumulated funds.” Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936, 946 (2016)...

March 17, 2017
Articles, Labor Market, Pension design, ,
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17Mar

Labor Force Participation in New England vs. The United States, 2007–2015: Why Was the Regional Decline More Moderate?

By Mary A. Burke (Federal Reserve Bank of Boston) This paper identifies the main forces that contributed to the decline in labor force participation in New England between 2007 and 2015, as well as the forces that moderated the region’s decline relative to that of the nation. This exercise contributes to an assessment of the outlook for participation in New England moving forward. Similar to previous findings pertaining to the United States as a whole, the single largest factor in...

March 17, 2017
Articles, Labor Market,
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14Mar

Personalized Information as a Tool to Improve Pension Savings: Results from a Randomized Control Trial in Chile

By Olga Fuentes; Jeanne Lafortune; Julio Riutort; José Tessada Félix Villatoro We randomly offer to workers in Chile personalized versus generalized information about their pension savings and forecasted pension income. Personalized information increased the probability and amounts of voluntary contributions after one year without crowding-out other forms of savings. Personalization appears to be very important: individuals who overestimated their pension at the time of the intervention saved more. Thus, a person’s inability to understand how the pension system affects them...

March 14, 2017
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10Mar

Does Financial Regulation Unintentionally Ignore Less Privileged Populations?

By Maya Haran Rosen & Orly Sade (Hebrew University) In 2014, the Israeli insurance and long term savings regulator reached out to the Israeli population to help individuals find inactive retirement plans and withdraw inactive funds. We find that the government's effort did not result in withdrawals of the majority of the accounts, and did not reach all subpopulations equally. Provident fund records indicate that those who took financial action and withdrew funds following the campaigns live in localities in...

March 10, 2017
Articles, Labor Market, Regulation, , ,
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February 2017

04Feb

Savings After Retirement: A Survey

By Mariacristina De Nardi, Eric French,& John B. Jones The saving patterns of retired U.S. households pose a challenge to the basic life-cycle model of saving. The observed patterns of out-of-pocket medical expenses, which rise quickly with age and income during retirement, and heterogeneous lifespan risk, can explain a significant portion U.S. savings during retirement. However, more work is needed to disentangle these precautionary saving motives from other motives, such as the desire to leave bequests. An important complementary question...

February 4, 2017
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04Feb

Retirement Security in an Aging Society

By James M. Poterba The share of the U.S. population over the age of 65 was 8.1 percent in 1950, 12.4 percent in 2000, and is projected to reach 20.9 percent by 2050. The percent over 85 is projected to more than double from current levels, reaching 4.2 percent by mid-century. The aging of the U.S. population makes issues of retirement security increasingly important. Elderly individuals exhibit wide disparities in their sources of income. For those in the bottom half of...

February 4, 2017
Aging, Articles, Labor Market, Savings, ,
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04Feb

The Role of Time Preferences and Exponential-Growth Bias in Retirement Savings

By Gopi Shah Goda, Matthew R. Levy, Colleen Flaherty Manchester, Aaron Sojourner & Joshua Tasoff There is considerable variation in retirement savings within income, age, and educational categories. Using a broad sample of the U.S. population, we elicit time preference parameters from a quasi-hyperbolic discounting model, and perceptions of exponential growth. We find that present bias (PB), the tendency to value utility in the present over the future in a dynamically inconsistent way, and exponential-growth bias (EGB), the tendency to...

February 4, 2017
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04Feb

Do Employer Pension Contributions Reflect Employee Preferences? Evidence from a Retirement Savings Reform in Denmark

By Itzik Fadlon, Jessica A. Laird & Torben Heien Nielsen This paper studies how firms set contributions to employer-provided 401(k)-type pension plans. Using a reform that decreased the subsidy for contributions to capital pension accounts for Danish workers in the top income tax bracket, we provide strong evidence that employers' contributions are based on their employees' savings preferences. We find an immediate decrease in employer contributions to capital accounts, whose magnitude increased in the share of employees directly affected by...

February 4, 2017
Articles, Labor Market, Savings,
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04Feb

Do Savings Increase in Response to Salient Information about Retirement and Expected Pensions?

By Mathias Dolls, Philipp Doerrenberg, Andreas Peichl & Holger Stichnoth How can retirement savings be increased? We explore a unique policy change in the context of the German pension system to study this question. As of 2004, the German pension authority started to send out annual letters providing detailed and comprehensible information about the pension system and individual expected pension payments. This reform did not change the level of pensions, but only manipulated the knowledge about and salience of expected...

February 4, 2017
Articles, Labor Market, Savings
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