November 2021
13Nov

Quantifying the Impact of Impact Investing

By Andrew W., Ruixun Zhang We propose a quantitative framework for assessing the financial impact of any form of impact investing, including socially responsible investing (SRI), environmental, social, and governance (ESG) objectives, and other non-financial investment criteria. We derive conditions under which impact investing detracts from, improves on, or is neutral to the performance of traditional mean-variance optimal portfolios, which depends on whether the correlations between the impact factor and unobserved excess returns are negative, positive, or zero, respectively. Using...

November 13, 2021
Articles, Investment,
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13Nov

How Will COVID-19 Affect Pensions for Noncovered Workers?

By Jean-Pierre Aubry, Kevin Wandrei, Laura Quinby Federal law allows certain state and local government employees to be excluded from Social Security if they are covered by an employer pension of sufficient generosity. As a result, approximately one-quarter of state and local workers are not covered by Social Security on their current job. Before COVID-19, these “FICA replacement plans” all satisfied the letter of the law in terms of providing benefits of sufficient generosity. This study has three aims. The...

November 13, 2021
Articles, Labor Market, Pension design, , ,
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13Nov

Fiduciary Duty, Social Conscience, and ESG Investing by a Trustee

By Max M. Schanzenbach, Robert H. Sitkoff This chapter, prepared for the 2021 Annual Heckerling Institute on Estate Planning, examines the law and economics of environmental, social, and governance (ESG) investing by a trustee. Trustees of pensions, charities, and personal trusts invest tens of trillions of dollars of other people’s money subject to a sacred trust known in the law as fiduciary duty. Recently, these trustees have come under increasing pressure to use ESG factors in making investment decisions. ESG investing...

November 13, 2021
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05Nov

The Economic Burden of Pension Shortfalls: Evidence from House Prices

By Darren Aiello, Asaf Bernstein, Mahyar Kargar, Ryan Lewis & Michael Schwert U.S. state pensions are underfunded by trillions of dollars, but their economic burden is unclear. In a model of inefficient taxation, real estate fully reflects the cost of pension shortfalls when it is the only form of immobile capital. We study the effect of pension shortfalls on real estate values at state borders, where labor and physical capital could more easily relocate to a state with a smaller...

November 5, 2021
Articles, Pension design, , , , ,
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05Nov

The Skill-Specific Automatability of Aging Workers and Retirement Decisions

By Zeewan Lee Much of the discourse on the impact of automation on labor supply tends to assess the labor force as a whole, thereby disregarding the marginal effect on aging workers. In lights of the growing technological changes, we assess the linkage between the automatability of workers and retirement timing. Based on the theoretical model of task-based technological changes and drawing data from the Health and Retirement Study and O*NET, we create an Automatability Index based on workers’ primary...

November 5, 2021
Aging, Articles, Innovation, Labor Market, , ,
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05Nov

Pensions, Income Taxes and Homeownership: A Cross-Country Analysis

By Hans Fehr, Maurice Hofmann & George Kudrna This paper studies the role of pensions and income taxes in determining homeownership and household wealth. It provides a cross-country analysis, using tax and pension policy designs in Germany, the US and Australia. These developed nations have similar incomes per capita but very different homeownership rates, with the US and Australia having much higher homeownership compared to Germany. The question is to what extent the observed differences in homeownership are induced by...

November 5, 2021
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October 2021
29Oct

Health and Aging Before and after Retirement

By Ana Abeliansky & Holger Strulik We investigate health and aging before and after retirement for specific occupational groups. We use five waves of the Survey of Health, Aging, and Retirement in Europe (SHARE) and construct a frailty index for elderly men and women from 10 European countries. Occupational groups are classified according to low vs. high education, blue vs. white collar color, and high vs. low physical or psychosocial job burden. Controlling for individual fixed effects, we find that,...

October 29, 2021
Aging, Articles, System Sustainability, ,
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27Oct

Market-led Sustainability is a ‘Fix that Fails’… but It May Have Been the Necessary ‘Defence at First Depth’

By Duncan Austin Humankind is a complex system suddenly pitched into adaptive crisis. From this bigger perspective, our ‘first response’ to the crisis has overwhelmingly been a voluntary market-led response under various banners – SRI, CSR, ESG, ‘impact’ etc. While this voluntary market-led (VML) meta-strategy has been a beneficial, and possibly inevitable, first response, it is becoming clear it is insufficient as an adaptive solution and that its pursuit now forestalls deeper changes required. We need to graduate from a VML...

October 27, 2021
Articles, Sustainability, , ,
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22Oct

Designing a pension system

By Vincenzo Galasso Designing a pension system is both a complex endeavor and a long lasting legacy. Complexity stems from the many trade-offs that conceiving a pension system entail and from how these initial decisions affect the social and economic behavioral responses of workers and retirees. Policy-makers planning a pension system have to evaluate its internal economic consistency, but also these feedbacks. Economic and demographic models that allow a quantitative evaluation of these costs and benefits are required. More than...

October 22, 2021
Articles, Pension design, , ,
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