How Teachers Value Pension Wealth: A Reexamination of the Illinois Experience

Shawn Ni (), Michael Podgursky and Fangda Wang
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Fangda Wang: Department of Economics, University of Missouri-Columbia

No 2007, Working Papers from Department of Economics, University of Missouri

Abstract: In a widely-cited study, Fitzpatrick (2015) found that more than a quarter of Illinois teachers were unwilling to pay 19 cents for pension enhancements worth one dollar in present value. We revisit this finding by tracking the same cohort of teachers to retirement, which permits exact measurement of the annuity received and service years. The vast majority of teachers purchased the upgrade. Among the teachers who did not, the benefit on average had a negative value given their retirement timing. Our analysis finds that Fitzpatrick's instrumental variables fail to capture the underlying heterogeneity of preferences driving this result.

Keywords: teacher's value of pension wealth; unobserved heterogeneity; state and local pension finance (search for similar items in EconPapers)
JEL-codes: H75 I21 J26 J45 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2020-10
New Economics Papers: this item is included in nep-age, nep-lma and nep-ure
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Citations: View citations in EconPapers (1)

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