Pension Wealth and Household Savings in Europe: Evidence from Sharelife

Riksbank Research Paper Series No. 96

Sveriges RiksbankWorking Paper Series No. 265

38 Pages Posted: 15 Aug 2013

See all articles by Rob J. M. Alessie

Rob J. M. Alessie

University of Groningen; Netspar; Tilburg University - Center for Economic Research (CentER)

Viola Angelini

University of Groningen - Faculty of Economics and Business; Netspar

Peter van Santen

Sveriges Riksbank; Netspar

Date Written: April 1, 2013

Abstract

We use recently collected retrospective survey data to estimate the displacement effect of pension wealth on household savings. The third wave of the Survey of Health, Ageing and Retirement in Europe, SHARELIFE, collects information on the entire job history of the respondent, a feature missing in most previous studies. We show that addressing measurement error problems is crucial to estimate the displacement effect when using survey data. We find that each euro of pension wealth is associated with a 47 (61) cent decline in non–pension wealth using robust (median) regression. In the presence of biases from measurement errors and omitted (unobserved) variables, we estimate a lower bound to the true offset between 17% and 30%, significantly different from zero. Instrumental variables regression estimates, although less precise, suggest full displacement.

Keywords: Displacement effect, Lifetime income, Retrospective survey, Measurement error

JEL Classification: D91, H55, D31

Suggested Citation

Alessie, Rob J. M. and Angelini, Viola and van Santen, Peter, Pension Wealth and Household Savings in Europe: Evidence from Sharelife (April 1, 2013). Riksbank Research Paper Series No. 96, Sveriges RiksbankWorking Paper Series No. 265, Available at SSRN: https://ssrn.com/abstract=2285340 or http://dx.doi.org/10.2139/ssrn.2285340

Rob J. M. Alessie

University of Groningen ( email )

P.O. box 800
9700 AV Groningen
Netherlands
050-3637240 (Phone)

HOME PAGE: http://members.chello.nl/~r.j.m.alessie

Netspar

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://www.netspar.nl

Tilburg University - Center for Economic Research (CentER)

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Viola Angelini

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Peter Van Santen (Contact Author)

Sveriges Riksbank ( email )

Brunkebergstorg 11
Stockholm, SE-103 37
Sweden
004687870569 (Phone)
00468210531 (Fax)

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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