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Data on Public Economics Described by Researchers at NBER (Why do individuals choose defined contribution plans? Evidence from participants in a...

August 21, 2014



Data on Public Economics Described by Researchers at NBER (Why do individuals choose defined contribution plans? Evidence from participants in a large public plan)

By a News Reporter-Staff News Editor at Politics & Government Week -- A new study on Public Economics is now available. According to news reporting originating from Cambridge, Massachusetts, by VerticalNews correspondents, research stated, "We examine individual choices between a defined contribution (DC) and a defined benefit (DB) retirement plan at a large public employer. We find sensible patterns with regard to standard economic and demographic factors: the probability of choosing the DC plan decreases with the relative financial generosity of the DB plans versus the DC plan and rises with education and income."

Our news editors obtained a quote from the research from NBER, "Using a survey of participants, we find that the ability to control for beliefs, preferences, and other variables not easily obtainable from administrative or standard household surveys increases the explanatory power over seven-fold. Among the important factors in the DB/DC pension choice are respondent attitudes about risk/return tradeoffs, financial literacy, return expectations, and political risk. We also find that individuals make sensible choices based on what they believe to be true about the plans, but that these beliefs about plan parameters are often wrong, thus leading to possibly sub-optimal decisions."

According to the news editors, the research concluded: "Finally, we provide evidence that individuals' preferences over plan attributes (e.g., the degree of control provided) are even more important determinants of the DB/DC decision than expected outcomes (e.g., the relative generosity of the plans)."

For more information on this research see: Why do individuals choose defined contribution plans? Evidence from participants in a large public plan. Journal of Public Economics, 2014;116():35-46. Journal of Public Economics can be contacted at: Elsevier Science Sa, PO Box 564, 1001 Lausanne, Switzerland. (Elsevier - www.elsevier.com; Journal of Public Economics - www.elsevier.com/wps/product/cws_home/505578)

The news editors report that additional information may be obtained by contacting J.R. Brown, NBER, Cambridge, MA 02138, United States.

Keywords for this news article include: Cambridge, Massachusetts, United States, Public Economics, North and Central America

Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2014, NewsRx LLC


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Source: Politics & Government Week


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