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Full-Text Articles in Economics
Household Saving: Micro Theories And Micro Facts, Martin Browning, Annamaria Lusardi
Household Saving: Micro Theories And Micro Facts, Martin Browning, Annamaria Lusardi
Dartmouth Scholarship
In this survey, we review the recent theoretical and empirical literature on household saving and consumption. The discussion is structured around a list of motives for saving and how well the standard theory captures these motives. We show that almost all of the motives for saving that have been suggested in the informal saving literature can be captured in the standard optimizing model. Particular attention is given to recent work on the precautionary motive and its implications for saving and consumption behavior. We also discuss the "behavioral" or "psychological" approach that eschews the use of standard optimization techniques and focuses …
Assessing The Effectiveness Of Saving Incentives, R. Glenn Hubbard, Jonathan S. Skinner
Assessing The Effectiveness Of Saving Incentives, R. Glenn Hubbard, Jonathan S. Skinner
Dartmouth Scholarship
The authors argue that there is more to be learned from recent research on the effectiveness of targeted saving incentives than the wide variation in empirical estimates suggests. They conclude that characterizations of 'all new saving' or 'no new saving' are extreme IRAs and 401(k) plans appear to stimulate moderate amounts of new saving. The authors suggest a cost-benefit approach to ask: What is the incremental gain in capital accumulation per dollar of foregone revenue? For quite conservative measures of the saving impacts of IRAs or 401(k)s, the incremental gains in capital accumulation per dollar of lost revenue are large.
How Retirement Saving Programs Increase Saving, James M. Poterba, Steven F. Venti, David A. Wise
How Retirement Saving Programs Increase Saving, James M. Poterba, Steven F. Venti, David A. Wise
Dartmouth Scholarship
This paper summarizes the authors work on the effect of IRA and 401(k) contributions on net personal saving. They consider many different nonparametric approaches to controlling for heterogeneity in individual saving behavior and conclude that the weight of the available evidence suggests that contributions to both IRAs and 401(k)s largely represent new saving. The authors devote particular attention to reconciling their results with the findings in other studies that reach different conclusions, sometimes using the same databases that the authors analyze. Methodological limitations that undermine the reliability of results in other studies explain many of these disparities.