Behavioral Responses to a Policy Treatment of Information about Future Pension Benefits

Najat El Mekkaoui (), Bérangère Legendre and T. S. Findley
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Bérangère Legendre: IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc

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Abstract: We evaluate a public policy that provides information to households about future pension benefits, wherein the policy is designed to encourage households to save and/or earn more for retirement. Using regression discontinuity designs and quantile regressions, we find that the treatment might create inequities in behavioral responses between households who process information and households who do not. Specifically, we find that the arrival of pension information encourages wealthy households toincrease their retirement savings, while it does not affect the behavior of households with less wealth. To interpret these findings that behavioral responses are asymmetric across the wealth distribution, we construct a life-cycle model with time-inconsistent dynamic optimization in which households have short planning horizons. This model generates predictions that are consistent with our empirical findings, namely that wealthy households (longer planning horizons) are more salient in their behavioral responses to the arrival of information about future pension benefits.

Keywords: Public policy; Pension benefits; households (search for similar items in EconPapers)
Date: 2019-08
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Published in The 75th Annual Congress of the International Institute of Public Finance, Aug 2019, Glasgow, United Kingdom

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04233744

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