 Does the balance of power within a family matter? The case of the Retirement Equity ActNo 202, Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University Abstract: This paper studies within-family decision making regarding investment in income protection for surviving spouses using a simple and tractable Nash-bargaining model. A change in US pension law (the Retirement Equity Act of 1984) is used as an instrument to derive predictions from the bargaining model and to contrast these with the predictions of the classical single-utility-function model of the household. This law change gave spouses of married pension-plan participants the right to survivor benefits unless they explicitly waived this right. The classical view of household behavior predicts that this would have had no effect on choices, while the bargaining model predicts an increase in spousal survivor protection. In the empirical part of the paper, the predictions of the classical model regarding the amount of life-insurance protection and the likelihood of a pensioner selecting survivor benefits are rejected in favor of the predictions of the Nash-bargaining model. The paper thus provides evidence for the need to take the existence of multiple decision makers into account when studying household behavior. New Economics Papers: this item is included in nep-ltv Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:igi:igierp:202 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University via Rontgen, 1 - 20136 Milano (Italy). |
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