Found 7 article(s) for author 'Savings'

Potential vs. realized savings under automatic enrollment

Potential vs. realized savings under automatic enrollment. John Beshears, David Laibson, Brigitte Madrian, July 2018, Paper, “Previous research has documented the powerful impact that automatic enrollment has on retirement savings outcomes. When a savings plan’s default—the option that is implemented on behalf of any employees that do not actively elect an alternative option—is changed from not participating in the plan to contributing a positive fraction of pay to the plan, the proportion of employees contributing to the plan increases dramatically, and many employees who would otherwise have not participated begin to accumulate plan balances (Madrian and Shea, 2001; Choi, et al., 2002 and 2004; Beshears, et al., 2008).Link

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Behavioral Household Finance

Behavioral Household Finance, John Beshears, David Laibson, Brigitte Madrian, July 2018, Paper, “This chapter provides an overview of household finance. The first part summarizes key facts regarding household financial behavior, emphasizing empirical regularities that are inconsistent with the standard classical economic model and discussing extensions of the classical model and explanations grounded in behavioral economics that can account for the observed patterns. This part covers five topics: consumption and savings, borrowing, payments, asset allocation, and insurance. The second part addresses interventions that firms, governments, and other parties deploy to shape household financial outcomes: education and information, peer effects and social influence, product design, advice and disclosure, choice architecture, and interventions that directly target prices or quantities.Link

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How to Increase America’s Saving Rate

How to Increase America’s Saving Rate. Martin Feldstein, July 26, 2018, Opinion, “Once upon a time, US policymakers believed that more consumer spending was better than higher saving. But even though officials have come to realize that a high level of saving means more investment and faster growth, legislation to encourage more personal saving has failed to reverse a sharply downward trend.Link

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Borrowing to Save? The Impact of Automatic Enrollment on Debt

Borrowing to Save? The Impact of Automatic Enrollment on Debt. John Beshears, David Laibson, Brigitte Madrian, December 6, 2017, Paper, “How much of the retirement savings induced by automatic enrollment is offset by increased borrowing outside the retirement savings plan? We study a natural experiment created when the U.S. Army began automatically enrolling its newly hired civilian employees into the Thrift Savings Plan (TSP) at a default contribution rate of 3% of income. Four years after hire, automatic enrollment causes no significant change in debt excluding auto loans and first mortgages (point estimate = 0.9% of income, 95% confidence interval = [-0.9%, 2.7%]). Automatic enrollment does significantly increase auto loan balances by 2.0% of income and first mortgage balances by 7.4% of income.Link

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Building Emergency Savings Through Employer-Sponsored Rainy Day Savings Accounts

Building Emergency Savings Through Employer-Sponsored Rainy Day Savings Accounts. John Beshears, David Laibson, October 2017, Paper, “Many Americans live paycheck to paycheck, carry revolving credit balances, and have little liquidity to absorb financial shocks (Angeletos et al. 2001; Kaplan and Violante 2014). One consequence of this financial vulnerability is that many individuals use a portion of their retirement savings during their working years. For every $1 that flows into 401(k)s and similar accounts, between 30¢ and 40¢ leaks out before retirement (Argento, Bryant, and Sabelhaus 2015). We explore the practical considerations and challenges of helping households accumulate liquid savings that can be deployed when urgent pre-retirement needs arise. We believe that this can be achieved cost effectively by automatically enrolling workers into an employer-sponsored payroll deduction “rainy day” or “emergency” savings account, and present three specific implementation options.Link

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The Promise of Microfinance and Women’s Empowerment: What Does the Evidence Say?

The Promise of Microfinance and Women’s Empowerment: What Does the Evidence Say? Dina Pomeranz, February 2014, Paper. “The microfinance revolution has transformed access to financial services for low-income populations worldwide. As a result, it has become one of the most talked-about innovations in global development in recent decades. However, its expansion has not been without controversy. While many hailed it as a way to end world poverty and promote female empowerment, others condemned it as a disaster for the poor…” Link

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Does front-loading taxation increase savings? Evidence from Roth 401(k) introductions

Does front-loading taxation increase savings? Evidence from Roth 401(k) introductions. David Laibson, Brigitte Madrian, 2014, Paper, “Can governments increase private savings by taxing savings up front instead of in retirement? Roth 401(k) contributions are not tax-deductible in the contribution year, but withdrawals in retirement are untaxed. The more common before-tax 401(k) contribution is tax-deductible in the contribution year, but both principal and investment earnings are taxed upon withdrawal. Using administrative data from eleven companies that added a Roth contribution option to their existing 401(k) plan between 2006 and 2010, we find no evidence that total 401(k) contribution rates differ between employees hired before versus after Roth introduction, which implies that take-home pay declines and the amount of retirement consumption being purchased by 401(k) contributions increases after Roth introduction.Link

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