Saving Incentives for Low- and Middle-Income Families: Why is the Saver's Credit Not More Effective?

Journal of the European Economic Association, Vol. 5, Nos. 2-3, pp. 647-661, April-May 2007

15 Pages Posted: 4 Feb 2011

See all articles by William G. Gale

William G. Gale

Brookings Institution

Jeffrey B. Liebman

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Peter R. Orszag

Lazard Asset Management

Emmanuel Saez

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

Esther Duflo

Massachusetts Institute of Technology (MIT) - Department of Economics; Abdul Latif Jameel Poverty Action Lab (J-PAL); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Bureau for Research and Economic Analysis of Development (BREAD)

Date Written: 2007

Abstract

This paper uses data from the largest tax preparer in the United States to estimate the impact of the "saver’s credit," aUSfederal program providing financial incentives to encourage retirement savings, on the decision to contribute to an IRA. It finds significant, but very modest, effects. This is contrasted with results from a field experiment showing much larger impacts of clearly presented matching incentives. Various explanations are discussed for why the saver’s credit is not more effective.

Keywords: Saver's Credit

JEL Classification: H00, H31, C93, D14

Suggested Citation

Gale, William G. and Liebman, Jeffrey B. and Orszag, Peter R. and Saez, Emmanuel and Duflo, Esther, Saving Incentives for Low- and Middle-Income Families: Why is the Saver's Credit Not More Effective? (2007). Journal of the European Economic Association, Vol. 5, Nos. 2-3, pp. 647-661, April-May 2007. Available at SSRN: https://ssrn.com/abstract=1754651

William G. Gale (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Avenue, NW
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Jeffrey B. Liebman

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
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HOME PAGE: http://www.jeffreyliebman.com

National Bureau of Economic Research (NBER)

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Peter R. Orszag

Lazard Asset Management ( email )

30 Rockefeller Plaza
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United States

Emmanuel Saez

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-642-4631 (Phone)
510-642-6615 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Esther Duflo

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
Room E52-544
Cambridge, MA 02139
United States
617-258-7013 (Phone)
617-253-6915 (Fax)

Abdul Latif Jameel Poverty Action Lab (J-PAL) ( email )

Cambridge, MA
United States

HOME PAGE: http://www.povertyactionlab.org/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Bureau for Research and Economic Analysis of Development (BREAD) ( email )

Duke University
Durham, NC 90097
United States

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