Effects of Public Policies on the Disposition of Lump-Sum Distributions: Rational and Behavioral Influences

William Gale and Michael Dworsky ()
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Michael Dworsky: Brookings Institution

Working Papers, Center for Retirement Research at Boston College from Center for Retirement Research

Abstract: This paper provides new evidence on how public policies affect individuals' disposition of pre-retirement lump-sum distributions (LSDs) from pensions. The policies, enacted in the 1980s and 1990s, include changes in tax rates, penalties, withholding rules, and default options. Using data from the Health and Retirement Study, we find that each set of policies influence LSD choices independently and through interactions with the other set. The impact of defaults and withholding rules implies that behavioral considerations influence household choices. This in turn creates the possibility that a wide range of policies could be used to change saving behavior.

Keywords: pre-retirement; lump-sum; distributions; withholding rules (search for similar items in EconPapers)
Pages: 21 pages
Date: 2006-08, Revised 2006-08
New Economics Papers: this item is included in nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:crr:crrwps:wp2006-15

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