The Importance of Behavioural Factors for Pension Savings Decisions – Cross-Country Evidence

Anna Kaliciak (), Radosław Kurach () and Walid Merouani
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Anna Kaliciak: University of London, United Kingdom
Radosław Kurach: Faculty of Economic Sciences, Wrocław University of Economics, Poland

Acta Oeconomica, 2019, vol. 69, issue 3, 357-391

Abstract: In this study, we challenge the problem of inadequate voluntary pension savings by exploring the micro-dataset of the Luxembourg Wealth Study (LWS) for three countries: Italy, the United Kingdom and the United States. The existing empirical literature usually focuses on the role of sociodemographic factors to understand this phenomenon, and theoretical studies additionally highlight the role of behavioural factors. However, empirical studies in this field are extremely scarce. The use of the LWS data enables us to fill this research gap. Separately for each country, we verify the role of individuals’ risk attitudes and intertemporal choices in the demand for voluntary pension savings. To make the results more robust, we add a set of socio-demographic control variables to our regressions. Our findings clearly reveal that being more risk averse and being less forward looking negatively affect people’s propensity to save for retirement. Furthermore, we confirm that age, gender and education are significant predictors of pension demand in each of the analysed countries. We argue that these conclusions have practical meaning to improve regulatory frameworks.

Keywords: supplementary pension savings; risk aversion; intertemporal choices; socio-demographic factors; Tobit models (search for similar items in EconPapers)
JEL-codes: C25 G41 J32 (search for similar items in EconPapers)
Date: 2019
Note: a) We are thankful to Jeffrey R. Brown, Christos Koulovatianos, Maureen Maloney, Edyta Marcinkiewicz and Piotr Paradowski for their constructive remarks on the earlier version of this manuscript. We would also like to acknowledge the participants of the 2nd Old-Age Security Conference (Wrocław, 2016) and the LIS/LWS Users Conference (Belval Campus, Luxembourg, 2017) for their encouragement. Last but not least, the insightful comments made by the anonymous reviewers are much appreciated. All remaining errors are our own. b) The research was supported under the European Commission’s 7th Framework Programme (FP7/2013-2017, grant No. 312691). c) The preliminary results have been also published in LWS Working Paper Series, No. 23, 2016. http://www.lisdatacenter.org/wps/lwswps/23.pdf
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