Social Security Bequests And The Life Cycle Theory Of Saving
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Social Security Bequests And The Life Cycle Theory Of Saving
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Author : Alan S. Blinder
language : en
Publisher:
Release Date : 2010
Social Security Bequests And The Life Cycle Theory Of Saving written by Alan S. Blinder and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
This paper studies the asset holdings of white American men near retirement age. Assets as conventional defined show no tendency to decline with age, in apparent contradiction of the life-cycle theory of saving. However, a broadened concept of assets which includes expected future pension benefits (both public and private) and expected future earnings (quot;human wealthquot;) does decline more or less as predicted by the theory. No matter how they are defined, assets are a decreasing function of the number of children--which casts doubt on the strength of the bequest motive. Finally, financial assets and social security wealth fail to exhibit the inverse relationship suggested by Feldstein's displacement hypothesis. To investigate these issues econometrically, an equation for assets is developed from the strict life-cycle theory. The specification is generalized to allow for (a) a bequest motive, proxied by the number of children; (b) displacement of private wealth by social security wealth that is not exactly dollar-for-dollar; (c) a level of consumption late in life that differs systematically from what the strict life-cycle theory implies. The equation is estimated by nonlinear least squares on a rich cross- sectional data set containing over 4300 observations. The results show that the life-cycle model has little ability to explain cross-sectional variability in asset holdings. The model's key parameters are poorly identified, despite the large sample size and considerable cross-sectional variation in most variables. According to the estimates, consumption late in Life is on average only about half of what the strict life-cycle theory predicts; each dollar of social security wealth displaces about 3% (with a large standard error) of private wealth; and the bequest motive, while present, is quite weak.
The Effect Of Social Security On Saving
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Author : Martin S. Feldstein
language : en
Publisher:
Release Date : 1980
The Effect Of Social Security On Saving written by Martin S. Feldstein and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1980 with Saving and investment categories.
This paper, which was presented as the 1979 Frank Paish Lecture to the British Association of University Teachers of Economics, provides a non-technical summary of the recent studies of the effects of social security on private saving. The first section discusses the theoretical indeterminacy of the effect of social security while the second part reviews the empirical studies. Although the traditional life cycle theory of saving clearly implies that the anticipation of social security benefits reduces private saving, a richer theoretical framework suggests several reasons why the saving response cannot be unambiguously established by theoretical reasoning. These reasons include the indirect effects of social security on retirement behavior, private pensions, and gifts and bequests. The econometric studies resolve this uncertainty and indicate that social security appears to reduce private saving substantially. These studies include(1) aggregate time series evidence on the U.S. saving rates over the past 50 years, (2) microeconomic evidence on the accumulation of wealth by a large sample of individual households, and (3) international comparisons of saving rates in major industrial countries
Social Security Bequests And The Life Cycle Theory Of Saving
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Author : Alan S. Blinder
language : en
Publisher:
Release Date : 1981
Social Security Bequests And The Life Cycle Theory Of Saving written by Alan S. Blinder and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1981 with Legacies categories.
This paper studies the asset holdings of white American men near retirement age. Assets as conventional defined show no tendency to decline with age, in apparent contradiction of the life-cycle theory of saving. However, a broadened concept of assets which includes expected future pension benefits (both public and private) and expected future earnings ("human wealth") does decline more or less as predicted by the theory. No matter how they are defined, assets are a decreasing function of the number of children--which casts doubt on the strength of the bequest motive. Finally, financial assets and social security wealth fail to exhibit the inverse relationship suggested by Feldstein's displacement hypothesis. To investigate these issues econometrically, an equation for assets is developed from the strict life-cycle theory. The specification is generalized to allow for (a) a bequest motive, proxied by the number of children; (b) displacement of private wealth by social security wealth that is not exactly dollar-for-dollar; (c) a level of consumption late in life that differs systematically from what the strict life-cycle theory implies. The equation is estimated by nonlinear least squares on a rich cross- sectional data set containing over 4300 observations. The results show that the life-cycle model has little ability to explain cross-sectional variability in asset holdings. The model's key parameters are poorly identified, despite the large sample size and considerable cross-sectional variation in most variables. According to the estimates, consumption late in Life is on average only about half of what the strict life-cycle theory predicts; each dollar of social security wealth displaces about 3% (with a large standard error) of private wealth; and the bequest motive, while present, is quite weak.
Essays On Saving Bequests Altruism And Life Cycle Planning
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Author : Laurence J. Kotlikoff
language : en
Publisher: MIT Press
Release Date : 2001-06-22
Essays On Saving Bequests Altruism And Life Cycle Planning written by Laurence J. Kotlikoff and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001-06-22 with Business & Economics categories.
This collection of essays, coauthored with other distinguished economists, offers new perspectives on saving, intergenerational economic ties, retirement planning, and the distribution of wealth. The book links life-cycle microeconomic behavior to important macroeconomic outcomes, including the roughly 50 percent postwar decline in America's rate of saving and its increasing wealth inequality. The book traces these outcomes to the government's five-decade-long policy of transferring, in the form of annuities, ever larger sums from young savers to old spenders. The book presents new theoretical and empirical analyses of altruism that rule out the possibility that private intergenerational transfers have offset those by the government.While rational life-cycle behavior can explain broad economic outcomes, the book also shows that a significant minority of households fail to make coherent life-cycle saving and insurance decisions. These mistakes are compounded by reliance on conventional financial planning tools, which the book compares with Economic Security Planner (ESPlanner), a new life-cycle financial planning software program. The application of ESPlanner to U.S. data indicates that most Americans approaching retirement age are saving at much lower rates than they should be, given potential major cuts in Social Security benefits.
The Effect Of Social Security On Private Saving
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Author : Martin S. Feldstein
language : en
Publisher:
Release Date : 1979
The Effect Of Social Security On Private Saving written by Martin S. Feldstein and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1979 with Saving and investment categories.
"This paper, which was presented as the 1979 Frank Paish Lecture to the British Association of University Teachers of Economics, provides a non-technical summary of the recent studies of the effects of social security on private saving. The first section discusses the theoretical indeterminacy of the effect of social security while the second part reviews the empirical studies. Although the traditional life cycle theory of saving clearly implies that the anticipation of social security benefits reduces private saving, a richer theoretical framework suggests several reasons why the saving response cannot be unambiguously established by theoretical reasoning. These reasons include the indirect effects of social security on retirement behavior, private pensions, and gifts and bequests. The econometric studies resolve this uncertainty and indicate that social security appears to reduce private saving substantially. These studies include(1) aggregate time series evidence on the U.S. saving rates over the past 50 years, (2) microeconomic evidence on the accumulation of wealth by a large sample of individual households, and (3) international comparisons of saving rates in major industrial countries"--NBER website.
Social Security And Saving
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Author : Martin Feldstein
language : en
Publisher:
Release Date : 1976
Social Security And Saving written by Martin Feldstein and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1976 with categories.
Incorporating Better Measures Of Bequest Motives And Uncertainty Into The Life Cycle Model
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Author : Chad Everett Abrams
language : en
Publisher:
Release Date : 1994
Incorporating Better Measures Of Bequest Motives And Uncertainty Into The Life Cycle Model written by Chad Everett Abrams and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1994 with categories.
The Cost Of Annuities
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Author : Benjamin M. Friedman
language : en
Publisher:
Release Date : 2010
The Cost Of Annuities written by Benjamin M. Friedman and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
The fact that most eldealy individuals in the United States choose to maintain a flat age-wealth profile, rather than buy individual life annuities, stands in contrast to central implications of the standard life-cycle model of consumption-saving behavior. The analysis in this paper lends support to an explanation for this phenomenon based either on the cost of annuities, importantly including the element of that cost due to adverse selection, or on the interaction of that cost and an intentional bequest motive. Expected yields offered on individual life annuities in the United States are lower by some 4-6%, or 2 1/2-4 1/2% after allowing for adverse selection, than yields on alternative long-term fixed-income investments. Simulations of an extended model of life-cycle saving and portfolio behavior, allowing explicitly for uncertain lifetimes and Social Security, show that yield differentials in this range can account for the observed behavior, even in the absence of a bequest motive, during the early years of retirement. By contrast, at older ages the combination of yield differentials in this range and a positive bequest motive is necessary to do so.
Savings And Bequests
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Author : Toshiaki Tachibanaki
language : en
Publisher: University of Michigan Press
Release Date : 1994
Savings And Bequests written by Toshiaki Tachibanaki and has been published by University of Michigan Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 1994 with Business & Economics categories.
How do bequests explain differences in savings behavior between countries?
Life Tables For The United States Social Security Area 1900 2080
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Author : Felicitie C. Bell
language : en
Publisher:
Release Date : 1992
Life Tables For The United States Social Security Area 1900 2080 written by Felicitie C. Bell and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1992 with Government publications categories.
Presents two types of life tables: period-based tables and cohort- based tables.