“Default Options and Retirement Saving Dynamics” (submitted) – This version: June 2021
I document that employees offset the short-run positive effect of auto-enrollment in retirement plans by saving less in the future. Consequently, a structurally estimated lifecycle model predicts that the long-term effect of auto-enrollment on wealth is negligible except at the bottom of the earnings distribution. The observed inertia at the savings default is explained by an optout cost of around $250. My estimate is smaller than the thousands of dollars estimated in previous studies because non-autoenrolled workers can compensate for not contributing now by contributing more later. Auto-enrollment improves welfare if the policymaker is paternalistic or has strong redistributive preferences.
“Efficiency in Household Decision Making: Evidence from the Retirement Savings of US Couples”, with Lucas Goodman (US Treasury) and Cormac O’Dea (Yale).
Pareto efficiency is a core assumption of most models of the household. We test this assumption using a new dataset covering the retirement saving contributions of 1.3 million U.S. couples. While a vast literature has failed to reject household efficiency in developed countries, we find evidence of widespread inefficiency in our setting: retirement contributions are not allocated to the account of the spouse with the highest employer match rate. This lack of coordination cannot be explained by inertia, auto-enrollment, or simple heuristics. Instead, we find that indicators of weaker marital commitment correlate with the incidence of inefficient allocations.
“The One Child Policy and Household Saving” with Nicolas Coeurdacier (SciencesPo) & Keyu Jin (LSE).
Revise & Resubmit, Journal of the European Economics Association. [This version: December 2019]
We investigate whether the ‘one-child policy’ has contributed to the rise in China’s household saving rate and human capital in recent decades. In a life-cycle model with intergenerational transfers and human capital accumulation, fertility restrictions lower expected old-age support coming from children—inducing parents to raise saving and education investment in their offspring. Quantitatively, the policy can account for at least 30% of the rise in aggregate saving. Using the birth of twins under the policy as an empirical out-of-sample check to the theory, we find that quantitative estimates on saving and education decisions line up well with micro-data.
“Altruism, Risk-taking and the Wealth Distribution”
“The Consumption Response to Automatic Enrollment” with Christopher Palmer