Essays in Household Savings and Portfolio Choice PDF Download

Author: Mariela Dal Borgo
Publisher:
ISBN:
Category :
Languages : en
Pages :

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Author: Sean Patrick Klein
Publisher:
ISBN:
Category :
Languages : en
Pages : 140

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This thesis consists of three essays that examine household savings and portfolio choice behavior. Chapter One analyses the effects of employer matching contributions and tax incentives on participation and contribution behavior in employer-sponsored 401(k) savings plans. Employer sponsored retirement savings plans consist of several different incentives designed to increase employee savings, including matching contributions, tax deductibility, and tax free compounding. There is a substantial literature on the effects of match rates on retirement savings, but little on the effects of preferential tax treatment. This chapter provides estimates of the impact of employer matching and tax deductibility on retirement savings using a uniquely suited dataset from a large United States Corporation. I estimate that the effect of a one percentage point change in the match rate corresponds to a 0.06 percentage point increase in savings plan participation rates, while a similar one percentage point increase in marginal tax rates increases participation by 1.35 percentage points. Changes in the match rate have an insignificant effect on contribution rates (conditional on participation), though a one percentage point change in marginal tax rates tends to increase contribution rates by 0.16 percentage points. The effects of the match rate and marginal tax rate are transformed into changes in the annualized rate of return of the savings plan and this disparity remains.

Author: Luigi Guiso
Publisher: MIT Press
ISBN: 9780262072212
Category : Business & Economics
Languages : en
Pages : 552

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Theoretical and empirical analysis of the structure of household portfolios.

Author: Anne-Marie Pålsson
Publisher:
ISBN:
Category :
Languages : en
Pages : 21

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Author: Tansel Yilmazer
Publisher:
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Category :
Languages : en
Pages : 121

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Author: Tokuo Iwaisako
Publisher:
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Category :
Languages : en
Pages : 33

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We examine whether Japanese households have begun to dissave and reduce their holdings of risky assets because of population aging over the period 2000-14. While there is little doubt that household savings have decreased, the true trend without a negative income shock in the early 2000s would have been declining more smoothly and moderately. The average share of risky assets in household portfolios increases with age and barely decreases even for retired households. The main sources of increasing household wealth are the increasing wealth of the elderly and the increasing proportion of the wealthier elderly population.

Author: Byungtae Yoon
Publisher:
ISBN:
Category : Electronic dissertations
Languages : en
Pages : 145

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This study investigates the effects of income risk and liquidity constraints on household portfolio choice and saving behavior using Japanese household-level data (POSFAL) from 1989 to 2003. An integrated analysis for three aspects of saving and overall analysis for whole portfolio structure, introduced in this study, provide following results and implications for saving and portfolio behavior in Japan. First, a factor entailing precautionary saving does not necessarily accompany a precautionary portfolio. Precautionary saving sensitively responds to income risk and liquidity constraints. But portfolio response takes some time for adjustment. Second, a household with higher precautionary saving motives apparently holds a smaller share of risky assets, a larger share of liquid safe assets and has a lower saving rate. This suggests that other sources of risk like unemployment and health risk affect savings and portfolio choice greatly. Third, each financial market has a specific dominant factor and there is a trade-off relationship between portfolios over explanatory variables. These results shed light on the explanation of the 1990's in Japan. Increasing income risk and expected liquidity constraints raise the saving rate, but the deteriorating income circumstances dominated and decreased the overall saving rate. Fundamental uncertainty like unemployment risk decrease the share of risky assets and increase the share of liquid assets. Expanded liquid assets contribute to the low interest rates trend.

Author: Tae-Young Pak
Publisher:
ISBN:
Category :
Languages : en
Pages : 302

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This dissertation considers household portfolio choice at the end of life-cycle. Three essays examine the importance of uncertainty about medical expenditure risk, cognitive aging, and subjective life horizon, and their role in explaining late-life savings decisions and portfolio allocation. Chapter 2 of the dissertation, entitled "Medical expenditure risk and precautionary saving: Evidence from Medicare Part D", tests the presence of precautionary saving motive to cope with medical expenditure risk. By examining Medicare Part D and it's association with household saving, I demonstrate that social insurance programs discourage private saving by reducing health-related uncertainty. Chapter 3 of the dissertation, entitled "Econometric analysis of cognitive abilities and portfolio choice", explores the role of cognitive aging in explaining a portfolio rebalancing towards safer assets at the end of life-cycle. In this essay, I argue that a gradual decrease in risky asset ownership at the end of life-cycle is in part driven by losing cognitive capabilities. I pay particular attention to testing whether such association is observed only on the extensive margin - that is, changes in ownership, or both risky asset ownership and reallocation across the intensive margin are affected. Causality is tested by exploiting exogenous variation in cognitive health, created by the introduction of Medicare Part D in 2006. Chapter 4 of the dissertation, entitled "Subjective life expectancy and portfolio choice: A household bargaining approach", examines collective decision-making when spouses have an incentive to bargain over portfolio allocation. This article starts with two well-known facts: (a) difference in life expectancy between husband and wife; and (b) age disparity in marriage. These two facts imply that females, on average, face 5 or 6 years longer retirement period to finance, and thus have more incentive to hold risky assets to achieve higher expected capital gains in the long-term. A difference in life expectancy then creates an incentive to bargain over how to allocate savings to risky and non-risky assets. The estimation results indeed show that more financial wealth is allocated to risky assets when a spouse with longer life expectancy has the "final say."

Author: Gene Amromin
Publisher:
ISBN:
Category : Households
Languages : en
Pages : 54

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Author: Arthur van Soest
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Studying household investment behavior is essential for understanding the full consequences of old age social security benefits. Using data from six waves of the Health and Retirement Study, we analyze the dynamics of portfolio composition before respondents start claiming social security benefits. We consider ownership as well as amounts held of several types of assets and debts. Using panel data censored regression models, portfolio adjustment is explained on the basis of demographics like gender, race, and year of birth, education level, household income, and perceived social security entitlements. We find that expectations of old age social security benefits have little effect on portfolio decisions, although there is some evidence that higher expected social security benefits lead to more risky financial investments, particularly in IRAs.