How Retirement Saving Programs Increase Saving

Abstract

This paper summarizes the authors work on the effect of IRA and 401(k) contributions on net personal saving. They consider many different nonparametric approaches to controlling for heterogeneity in individual saving behavior and conclude that the weight of the available evidence suggests that contributions to both IRAs and 401(k)s largely represent new saving. The authors devote particular attention to reconciling their results with the findings in other studies that reach different conclusions, sometimes using the same databases that the authors analyze. Methodological limitations that undermine the reliability of results in other studies explain many of these disparities.