September 2017

20Sep

The Economic Importance of Financial Literacy: Theory and Evidence

By Annamaria Lusardi & Olivia S. Mitchell In this paper, we undertake an assessment of the rapidly growing body of research on financial literacy. We start with an overview of theoretical research which casts financial knowledge as a form of investment in human capital. Endogenizing financial knowledge has important implications for welfare as well as policies intended to enhance levels of financial knowledge in the larger population. Next, we draw on recent surveys to establish how much (or how little)...

September 20, 2017
Articles, Investing, Savings, , ,
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20Sep

Borrowing on the Wrong Credit Card: Evidence from Mexico

By Alejandro Ponce (World Justice Project), Enrique Seira (Banco de México; ITAM) & Guillermo Zamarripa (FUNDEF, Mexico) We study how consumers allocate debt across credit cards they already hold using new data on credit card activity for a representative sample of consumers with two homogeneous cards in Mexico. We find that relative prices are a very weak predictor of the allocation of debt, purchases, and payments. On average, consumers pay 31 % above their minimum financing cost. Evidence on cross-card...

September 20, 2017
Articles, Management, Savings
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15Sep

Nudging Retirement Savings: A Field Experiment on Supplemental Plans

By Robert L. Clark, Robert G. Hammond, Melinda Sandler Morrill, Christelle Khalaf Although supplemental saving plans can be an important part of an individual's financial security in retirement, contribution rates remain low, particularly among those with lower salaries and less education. We report findings from a field experiment that distributed an informational nudge containing information on key aspects of the employer-provided supplemental saving plans of older public employees in North Carolina. Among workers participating in a supplemental plan, individuals who...

September 15, 2017
Articles, Investing, Labor Market, Pension design, Slider-Left
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15Sep

Recasting Social Canada: A Reconsideration of Federal Jurisdiction Over Social Policy

By Sujit Choudhry (Center for Constitutional Transitions) Who speaks for Canada? For the past fifty years, during both the expansion and the retraction of the Canadian welfare state, the politics of social policy has revolved around this single question. In this article, I step back from the politics of social policy to reflect on the constitutional framework within which that politics occurs. My focus is the scope of the federal government’s jurisdiction over social policy. A distinctive feature of Canadian...

September 15, 2017
Articles, Regulation, ,
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15Sep

Drawing Down Retirement Savings – Do Pensions, Taxes and Government Transfers Matter Much for Optimal Decisions?

By Bonnie-Jeanne MacDonald (Independent), Richard J. Morrison (Independent), Marvin Avery (Human Resources and Skills Development), Lars Osberg (Dalhousie University) This paper examines the importance of pensions (employment and social security), taxes and government transfers for alternative retirement savings drawdown strategies, based on Canadian evidence. Using as examples single elderly Canadians at the 10th, median and 90th percentiles of the income distribution, we use a lifetime utility framework to evaluate an illustrative set of six popular drawdown strategies. Our longitudinal dynamic...

September 15, 2017
Adequacy, Articles, Pension design, Savings, Slider, , ,
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08Sep

Annuity Options in Public Pension Plans: The Curious Case of Social Security Leveling

By Robert L. Clark, Robert G. Hammond, Melinda S. Morrill, David Vanderweide Social Security Leveling is an annuity option that allows participants to receive a level income before and after age 62. The retiree receives a larger pension benefit prior to age 62, but then the pension benefit is lowered at age 62 when the individual is expected to claim Social Security benefits. This option is not uncommon in public pension plans, yet little is known about how this option...

September 8, 2017
Aging, Articles, Pension design, Regulation, ,
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08Sep

Does Financial Education Impact Financial Literacy and Financial Behavior, and If so, When?

By Tim Kaiser (German Institute for Economic Research (DIW Berlin); University of Kiel) and Lukas Menkhoff (German Institute for Economic Research (DIW Berlin); Humboldt University of Berlin) In a meta-analysis of 126 impact evaluation studies, we find that financial education significantly impacts financial behavior and, to an even larger extent, financial literacy. These results also hold for the subsample of randomized experiments (RCTs). However, intervention impacts are highly heterogeneous: Financial education is less effective for lowincome clients as well as...

September 8, 2017
Articles, Investing, Savings, , ,
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08Sep

Financial Literacy and Inclusive Growth: Challenges and Opportunities

By Dinesha P. T. Sr. (University of Mysore) In India, financial literacy could now be only for the disadvantaged needy / underprivileged / poor but this is a continuous process where all citizens of the country should be periodically educated, which would become a certain tool to pave for the economic growth and the strength of the country. Recently our Prime Minister has announced series of ambitious social security schemes, relating to the pension and insurance sector and intended at...

September 8, 2017
Adequacy, Articles, Labor Market, Slider-Left, ,
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01Sep

Do Good Working Conditions Make You Work Longer? Evidence on Retirement Decisions Using Linked Survey and Register Data

By Petri Bockerman (Labour Institute for Economic Research; University of Turku) and Pekka Ilmakunnas (Aalto University School of Business) We analyze the potential role of adverse working conditions and management practices in the determination of employees' retirement behavior. Our data contain both comprehensive information regarding perceived job disamenities, job satisfaction, and intentions to retire from nationally representative cross-sectional surveys and information on employees' actual retirement decisions from longitudinal register data that can be linked to the surveys. Using a trivariate...

September 1, 2017
Adequacy, Aging, Articles, Labor Market, ,
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01Sep

Equity Solvency Capital Requirements: What Institutional Regulation Can Learn from Private Investor Regulation

By David Blitz, Winfried G. Hallerbach, Laurens Swinkels & Pim van Vliet (Robeco Asset Management) Solvency II has one standard equity solvency capital requirement for type 1 or developed market stocks (39 percent) and one for type 2 or emerging market stocks (49 percent). As such, differences in financial economic risk of stock portfolios within developed or emerging markets do not influence solvency requirements. This encourages risk-seeking behavior by insurance companies, and could sustain or even create structural mispricing in...

September 1, 2017
Articles, Corporate Governance, Investing, Regulation
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