IRAs and Household Saving Revisited: Some New Evidence / Orazio P. Attanasio, Thomas C. DeLeire.

Format:

Book

Author/Creator:

Attanasio, Orazio P.

Contributor:

National Bureau of Economic Research.

DeLeire, Thomas C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4900.

NBER working paper series no. w4900

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

IRAs and Household Saving Revisited

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1994.

Summary:

The effectiveness of tax-favored savings accounts in raising national savings depends crucially upon the willingness of households to reduce consumption in order to finance contributions to these accounts. The debate over the tax deductibility of IRA's has centered on whether IRA contributions represented new savings or reshuffled assets. We devise a test to distinguish between these two hypotheses where we compare the behavior of households which just opened an IRA account with that of households which already had an IRA account. Our test accounts for any unobservable heterogeneity across the two groups. We find evidence that supports the view that households financed their IRA contributions primarily through reductions in their stocks of other assets. Our results indicate that less than 20% of IRA contributions represented addition to national savings.

Notes:

Print version record

October 1994.