Have Iras Increased U.S. Saving?: Evidence from Consumer Expenditure Surveys

61 Pages Posted: 15 Jan 2007 Last revised: 25 Jul 2010

See all articles by Steven F. Venti

Steven F. Venti

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

David A. Wise

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

Date Written: April 1987

Abstract

The vast majority of Individual Retirement Account contributions represent net new saving, based on evidence from the quarterly Consumer Expenditure Surveys (CES). The results are based on analysis of the relationship between IRA contributions and other financial asset saving. The data show almost no substitution of IRAs for other saving. While the core of the paper is based on cross-section analysis, important use is made of the CES panel of independent cross-sections that span the period during which IRAs were introduced. Estimates for the post 1982 period, when IRAs were available to all employees, are based on a flexible constrained optimization model, with the IRA limit the principle constraint. The implications of this model for saving in the absence of the IRA option match very closely the actual non-IRA financial asset saving behavior prior to 1982. IRA saving does not show up as other financial asset saving in the pre-IRA period.

Suggested Citation

Venti, Steven F. and Wise, David A., Have Iras Increased U.S. Saving?: Evidence from Consumer Expenditure Surveys (April 1987). NBER Working Paper No. w2217. Available at SSRN: https://ssrn.com/abstract=347008

Steven F. Venti (Contact Author)

Dartmouth College - Department of Economics ( email )

6106 Rockefeller Center
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603-646-2526 (Phone)
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National Bureau of Economic Research (NBER)

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David A. Wise

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Harvard University - Harvard Kennedy School (HKS)

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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