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Full-Text Articles in Social and Behavioral Sciences
Effects Of The Financial Crisis And Great Recession On American Households, Michael Hurd, Susann Rohwedder
Effects Of The Financial Crisis And Great Recession On American Households, Michael Hurd, Susann Rohwedder
Susann Rohwedder
In this paper we present evidence from high-frequency data collections dedicated to tracking the effects of the financial crisis and great recession on American households. These data come from surveys that we conducted in the American Life Panel – an Internet survey run by RAND Labor and Population. The first survey was fielded at the beginning of November 2008, immediately following the large declines in the stock market of September and October 2008. The next survey followed three months later in February 2009. Since May 2009 we have collected monthly data on the same households. This paper shows the levels …
The Effects Of The Economic Crisis On The Older Population, Michael Hurd, Susann Rohwedder
The Effects Of The Economic Crisis On The Older Population, Michael Hurd, Susann Rohwedder
Susann Rohwedder
We study the effects of the 2007-2009 recession on the population age 55 and older. Households in and near retirement have suffered sizeable losses in assets as a result of the economic crisis. There are a number of ways in which households might respond: reduce spending and with that increase saving, work longer, and/or bequeath less. Using longitudinal data from the Health and Retirement Study and its supplemental surveys, we find that all of these adjustments have been important.
The Effect Of The Risk Of Out-Of-Pocket Spending For Health Care On Economic Preparation For Retirement, Michael Hurd, Susann Rohwedder
The Effect Of The Risk Of Out-Of-Pocket Spending For Health Care On Economic Preparation For Retirement, Michael Hurd, Susann Rohwedder
Susann Rohwedder
After retirement, the primary sources of uncertainty with respect to an individual’s economic status are longevity, investment outcomes and out-of-pocket spending on health care. In previous work, we estimated economic preparation for retirement, taking into account the risk of living to an advanced old age and the concomitant risk of running out of resources. But while we accounted for the average level out-of-pocket spending for health care, we did not account for the risk of out-of-pocket spending. In this paper we augment our model for this omission. We find that the risk of out-of-pocket health care spending reduces economic preparation …
Mental Retirement, Susann Rohwedder, Robert Willis
Mental Retirement, Susann Rohwedder, Robert Willis
Susann Rohwedder
Early retirement appears to have a significant negative impact on the cognitive ability of people in their early 60s that is both quantitatively important and causal. We obtain this finding using cross-nationally comparable survey data from the United States, England, and Europe that allow us to relate cognition and labor force status. We argue that the effect is causal by making use of a substantial body of research showing that variation in pension, tax, and disability policies explain most variation across countries in average retirement rates. (In an informal manner, we are arguing that public policies that affect the age …
The Displacement Effect Of Public Pensions On The Accumulation Of Financial Assets, Michael Hurd, Pierre-Carl Michaud, Susann Rohwedder
The Displacement Effect Of Public Pensions On The Accumulation Of Financial Assets, Michael Hurd, Pierre-Carl Michaud, Susann Rohwedder
Susann Rohwedder
The generosity of public pensions may depress private savings and provide incentives to retire early. While there is plenty of evidence supporting the latter effect, there remains considerable controversy as whether or not public pensions crowd out private savings. This paper uses international micro-datasets collected over recent years to investigate whether public pensions displace private savings. The identification strategy relies on differences in the progressivity or non-linearity of pension formulas across countries. We also make use of large heterogeneity in earnings across education group and country. The evidence we present is consistent with previous studies using cross sectional and time-series …
The Adequacy Of Economic Resources In Retirement, Michael Hurd, Susann Rohwedder
The Adequacy Of Economic Resources In Retirement, Michael Hurd, Susann Rohwedder
Susann Rohwedder
The most common metric for assessing the adequacy of economic preparation for retirement is the income replacement rate, the ratio of income after retirement to income before retirement. However both economic theory and common sense say that someone is adequately prepared if she is able to maintain her level of economic well-being, which is not the same as maintaining her level of income or some fixed proportion of income. Economic well-being is typically measured by consumption, which is the measure we use. We define and estimate measures of economic preparation for retirement based on a complete inventory of economic resources, …
Individuals’ Responses To Social Security Reform, Adeline Delavande, Susann Rohwedder
Individuals’ Responses To Social Security Reform, Adeline Delavande, Susann Rohwedder
Susann Rohwedder
The Social Security trust fund is predicted to be depleted by 2041. While there are several viable reform proposals to restore long-term solvency of the Social Security system, one important element that is critical to the success of any reform remains unknown: how will individuals respond to, for example, a cut of their Social Security benefits. Will they work longer or save more or both, and to what extent will their response make up for the cut in benefits? In this paper we use data from the HRS Internet Survey where we asked respondents directly what they would do if …
The Retirement-Consumption Puzzle: Actual Spending Change In Panel Data, Michael Hurd, Susann Rohwedder
The Retirement-Consumption Puzzle: Actual Spending Change In Panel Data, Michael Hurd, Susann Rohwedder
Susann Rohwedder
The simple one-good model of life-cycle consumption requires that consumption be continuous over retirement; yet prior research based on partial measures of consumption or on synthetic panels indicates that spending drops at retirement, a result that has been called the retirement-consumption puzzle. Using panel data on total spending, nondurable spending and food spending, we find that spending declines at small rates over retirement, at rates that could be explained by mechanisms such as the cessation of work-related expenses, unexpected retirement due to a health shock or by the substitution of time for spending. In the low-wealth population where spending did …
Economic Well-Being At Older Ages: Income- And Consumption-Based Poverty Measures In The Hrs, Michael Hurd, Susann Rohwedder
Economic Well-Being At Older Ages: Income- And Consumption-Based Poverty Measures In The Hrs, Michael Hurd, Susann Rohwedder
Susann Rohwedder
According to economic theory, well-being or utility depends on consumption. However, at the household level, total consumption is rarely measured because its collection requires a great deal of survey time. As a result income has been widely used to assess economic well-being and poverty rates. Yet, because households can use wealth to consume more than income, an income-based measure of well-being could yield misleading results for many households, especially at older ages. We use data from the Health and Retirement Study to find income-based poverty rates which we compare with poverty rates as measured in the Current Population Survey. We …
Pension Wealth And Household Saving: Evidence From Pension Reforms In The United Kingdom, Orazio Attanasio, Susann Rohwedder
Pension Wealth And Household Saving: Evidence From Pension Reforms In The United Kingdom, Orazio Attanasio, Susann Rohwedder
Susann Rohwedder
Using three major U.K. pension reforms as natural experiments we investigate the relationship between pension saving and discretionary private savings. Unlike most differences-in-differences approaches which rely on average differences between control and treatment group, we use economic theory to model the response of each individual household. The empirical analysis, based on the Family Expenditure Survey, uses both time-series and cross sectional variation to identify the behavioral response. The earnings-related tier of the pension scheme is found to have a negative impact on private savings with relatively high substitution elasticities; the impact of the flat-rate tier is not significantly different from …