Self-Control and Saving for Retirement

Laibson, David; Repetto, Andrea; Tobacman, Jeremy; Hall, Robert E.; Gale, William G.; Akerlof, George A.

doi:10.2307/2534671

Cited by 581 publications

(403 citation statements)

References 58 publications

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“…See, e.g., Laibson, Repetto, and Tobacman (1998). From this perspective, it might seem that taxes in the future, including estate taxes (and gift taxes, which may be incurred long after income is earned and has been saved) would have less of an effect on behavior.…”

Section: The Possibility That Transfers Are Not the Results Of Maximizmentioning

confidence: 99%

A Framework for Assessing Estate and Gift Taxation

Kaplow

2000

SSRN Journal

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Whether and how estates and gifts should be taxed has long been a controversial subject, and the approach to estate and gift taxation varies among developed countries. Arguments for and against various forms of transfer taxation have focused on concerns about the distribution of income and wealth, intergenerational equity, raising revenue, savings incentives, and other economic and philosophical issues. This essay has two purposes. The first is to examine the conceptual basis for various arguments for and against the current estate and gift tax regime and proposed alternatives. The second is to integrate policy analysis of transfer taxation with that of the rest of the tax system, notably, the income tax. The analysis begins by considering how it would be optimal to tax transfers if they are viewed simply one of many forms of expenditure by donors, and then it explores how the distinctive features of gifts and bequests may alter the conclusions. The importance of different transfer motives is discussed, and the analysis is reconsidered in the light of the importance of human capital in intergenerational transfers; differences between inter vivos transfers and bequests, between gifts to individuals and gifts to charitable institutions, and among gifts to donees having varying relationships to the donor; and the possibility that transfers are not explained by maximizing behavior. JEL Nos. H21, H23, H24, K34

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Section: The Possibility That Transfers Are Not the Results Of Maximizmentioning

confidence: 99%

A Framework for Assessing Estate and Gift Taxation

Kaplow

2000

SSRN Journal

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“…Several papers (surveyed in Poterba et al, 1996) found that these plans tend to increase savings among plan 9 See Laibson et al (1998). 10 See Madrian and Shea (2001), Choi et al (2001Choi et al ( , 2004a.…”

Section: Related Literaturementioning

confidence: 99%

The impact of participation in employment-based retirement savings plans on material hardship

Heim¹,

Ramnath

2015

Journal of Pension Economics and Finance

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To contribute to a retirement plan (barring an increase in income), an individual must either reduce consumption or increase debt. Using data from the 2004 wave of the Survey of Income and Program Participation, we examine the extent to which contributing to 401(k)-type accounts leads to an increase in short-term financial difficulties, particularly among low-income individuals. After instrumenting for plan take-up, we find that contributing to a 401(k) plan appears to have a small positive impact on the presence of any material hardship and debt holding among the lowest income quintiles, though that effect diminishes further up the income distribution.JEL CODES: J32, E21, H31

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“…In particular, although hyperbolic discounting may place greater weight on the interests of future generations, there are problems with incorporating hyperbolic discounting of utility into social cost-benefit analysis (Pearce et al, 2003;Groom et al, 2005). Because hyperbolic discounting can explain a range of perplexing human behaviours, including drug addiction (Gruber & Koszegi, 2001), sub-optimally low savings rates (Laibson, 1997;Laibson et al, 1998;Harris & Laibson, 2001), procrastination (ODonoghue & Rabin, 1999a,b;Benabou & Tirole, 2004) and various others (Akerlof, 1991), this paper does not make the normative recommendation that hyperbolic preferences be incorporated into optimal policy making. 4 On the other hand, it is important to understand the descriptive implications of what might happen if a planner does use hyperbolic discounting in making policy, if only so that we can be aware of potential problems before they arise.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal harvesting of fish stocks under a time-varying discount rate

Duncan

Hepburn

Papachristodoulou

2011

Journal of Theoretical Biology

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Optimal control theory has been extensively used to determine the optimal harvesting policy for renewable resources such as fish stocks. In such optimizations, it is common to maximise the discounted utility of harvesting over time, employing a constant time discount rate. However, evidence from human and animal behaviour suggests that we have evolved to employ discount rates which fall over time, often referred to as "hyperbolic discounting". This increases the weight on benefits in the distant future, which may appear to provide greater protection of resources for future generations, but also creates challenges of time-inconsistent plans. This paper examines harvesting plans when the discount rate declines over time. With a declining discount rate, the planner reduces stock levels in the early stages (when the discount rate is high) and intends to compensate by allowing the stock level to recover later (when the discount rate will be lower). Such a plan may be feasible and optimal, provided that the planner remains committed throughout. However, in practice there is a danger that such plans will be re-optimized and adjusted in the future. It is shown that repeatedly restarting the optimization can drive the stock level down to the point where the optimal policy is to harvest the stock to extinction. In short, a key contribution of this paper is to identify the surprising severity of the consequences flowing from incorporating a rather trivial, and widely prevalent, non-rational aspect of human behaviour into renewable resource management models. These ideas are related to the collapse of the Peruvian anchovy fishery in the 1970's.1

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Self-Control and Saving for Retirement

Cited by 581 publications

References 58 publications

A Framework for Assessing Estate and Gift Taxation

A Framework for Assessing Estate and Gift Taxation

The impact of participation in employment-based retirement savings plans on material hardship

Optimal harvesting of fish stocks under a time-varying discount rate

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