TY - BOOK
T1 - Predicting Retirement Savings Using Survey Measures of Exponential-Growth Bias and Present Bias
AU - Shah Goda, Gopi
AU - Levy, Matthew
AU - Flaherty Manchester, Colleen
AU - Sojourner, Aaron J.
AU - Tasoff, Joshua
PY - 2018
Y1 - 2018
N2 - In a nationally-representative sample, we predict retirement savings using survey-based elicitations of exponential-growth bias (EGB) and present bias (PB). We find that EGB, the tendency to neglect compounding, and PB, the tendency to value the present over the future, are highly significant and economically meaningful predictors of retirement savings. These relationships hold controlling for cognitive ability, financial literacy, and a rich set of demographic controls. We address measurement error as a potential confound and explore mechanisms through which these biases may operate. Back of the envelope calculations suggest that eliminating EGB and PB would increase retirement savings by approximately 12 percent.
AB - In a nationally-representative sample, we predict retirement savings using survey-based elicitations of exponential-growth bias (EGB) and present bias (PB). We find that EGB, the tendency to neglect compounding, and PB, the tendency to value the present over the future, are highly significant and economically meaningful predictors of retirement savings. These relationships hold controlling for cognitive ability, financial literacy, and a rich set of demographic controls. We address measurement error as a potential confound and explore mechanisms through which these biases may operate. Back of the envelope calculations suggest that eliminating EGB and PB would increase retirement savings by approximately 12 percent.
M3 - Commissioned report
SN - 11762
BT - Predicting Retirement Savings Using Survey Measures of Exponential-Growth Bias and Present Bias
PB - IZA Discussion Papers
ER -