Thursday, January 15, 2015

Stanford talk on behavioral economics and retirement saving

This past Tuesday, I flew to Stanford Law School for a one-day visit, and presented my paper "Multiple Myopias, Multiple Selves, and the Under-Saving Problem" at Joe Bankman's and Dan Kessler's tax policy colloquium.

My slides, revised from when I presented the paper at the National Tax Association annual meeting last November, are available in pdf form here.

Although I struggled a bit writing this paper, some have told me that it makes a couple of reasonably new contributions to the literature on behavioral economics and retirement saving.  One is to connect the issue about retirement savings "incentives" in the income tax to the fundamental tax reform debate.  For example, I note that if we take the Chetty et al point that "subsidies don't work" in increasing retirement saving, the underlying claim is highly relevant to the relative merits of income and consumption taxation.  The case for income taxation is potentially strengthened if people are relatively oblivious to the deferred taxation of saving.

Second, I talk about the labor supply issues raised by, say, reducing under-savers' take-home pay via "nudges" that cause them to enroll in employer retirement savings plans.  These are at least conceptually important, as they are part of understanding how people make decisions, even if short-term labor supply responsiveness is generally low for the relevant population.

I'm aware of no empirical work on this issue.  As the paper notes, under some of the explanations for under-saving one would expect to have offsetting substitution and income effects, making the research problem more complicated than it would otherwise be (though surely not impossible to address).

I also haven't seen anything discussing the labor supply issues from a theoretical standpoint, with the exception of this article by Louis Kaplow, which helped to inform my own thinking.

The article will be appearing in the Connecticut Law Review sometime this year, as the focus of a symposium issue that will also have three or more papers commenting on it.

One of the questions I was asked at the Stanford session was: What sort of responses have you gotten to the article?  I answered: I've gotten some nice feedback from commenters, and from a few other people to whom I sent it.  But other than that, it was exactly the same as what almost always happens when you post or publish something.  Out it goes, you don't hear much back, and you just go on to your next project, whatever it might be.

No comments: