Using three major UK pension reforms as natural experiments we investigate the relationship between pension saving and discretionary private savings. Unlike most differences-in-differences approaches which rely on average differences between control and treatment group, we use economic theory to model the response of each individual household. The empirical analysis, based on the Family Expenditure Survey, uses both time-series and cross-sectional variation to identify the behavioral response. The earnings-related tier of the pension scheme is found to have a negative impact on private savings with relatively high substitution elasticities; the impact of the flat-rate tier is not significantly different from zero.
Authors
CPP Co-Director
Orazio is an International Research Fellow at the IFS, a Professor at Yale and a Research Associate at the National Bureau of Economic Research.
Susanne Rohwedder
Journal article details
- DOI
- 10.1257/000282803322655419
- Publisher
- American Economic Association
- JEL
- H55, H91
- Issue
- December 2003
Suggested citation
Attanasio, O and Rohwedder, S. (2003). 'Pension wealth and household saving: evidence from pension reforms in the United Kingdom' (2003)
More from IFS
Understand this issue
Public investment: what you need to know
25 April 2024
The £600 billion problem awaiting the next government
25 April 2024
If you can’t see it, you can’t be it: role models influence female junior doctors’ choice of medical specialty
24 April 2024
Policy analysis
4.2 million working-age people now claiming health-related benefits, could rise by 30% by the end of the decade
19 April 2024
Recent trends in and the outlook for health-related benefits
19 April 2024
Progression of nurses within the NHS
12 April 2024
Academic research
The employment and distributional impacts of nationwide minimum wage changes
10 April 2024
Willingness to pay for improved public education and public healthcare systems: the role of income mobility prospects
14 March 2024
Unfunded mandates and taxation
14 March 2024