This project will study how rules and regulations governing retirement savings and unemployment insuranceaffect incentives for savings in different kinds of assets (liquid and illiquid) as well as incentives for working.The project will develop and estimate a model of life-cycle savings decisions using Chilean data from theSocial Protection survey, which was administered in 2002, 2004, and 2006 combined with administrativedata on voluntary and involuntary pension contributions that go back to 1980.

The goal of this project is to analyze the empirical determinants of workers’ decision to annuitize or not at retirement, in Chile. An important decision that older people must consider pertains to how they should manage the decumulation process for their retirement assets. One option in the Chilean case is to purchase an annuity that provides a stream of income for the length of purchaser’s life, which requires transferring the funds to an insurance company.

The proposed research seeks to investigate the determinants of borrowing and repayment patterns from 401(k) pension plans. In this pilot project, we seek to assess how employee and plan characteristics affect the propensity to take these loans, the likelihood of repaying them, and how large the loans are when people take them. The economic life-cycle model predicts that younger people will be more likely to take loans as they are more credit-constrained.

With individuals living longer and the aging of the Baby Boomer cohort, the US is experiencing a demographic revolution. Given that risk of dementia increases substantially with age, this aging revolution will drastically increase the prevalence of dementia unless interventions to prevent or delay it are found. Physical activity has been identified as a potential intervention to lower the risk of dementia and/or improve/maintain cognitive function.

The introduction of lifecycle funds into 401(k) plans offers a rich environment in which to assess workers’ portfolio allocation decisions. Consistent with behavioral models, employer design decisions strongly influence lifecycle adoption behavior while fundamentally altering portfolio characteristics, both in the cross-section and longitudinally. Yet there are also elements of rational choice by new employees, as well as choice constrained by information costs among workers with low literacy characteristics.

We examine insurance markets in which there are two types of customers: those who regret suboptimal decisions and those who don’t. In this setting, we characterize the equilibria under hidden information about the type of customers and hidden action. We show that both pooling and separating equilibria can exist.

How do the economic bene…ts of marriage vary with macroeconomic conditions? One of the major bene…ts of marriage is the ability to dynamically coordinate labor supply decisions in response to shocks. For instance, when one spouse loses a job, the other can work more. This paper argues that dynamic coordination is countercyclical; the innovations to husbands’ and wives’labor incomes are more positively correlated when the economy is growing rapidly.

In the U.S. and in Chile, there have been heated debates about the relative merits of a decentralized privatized pension system relative to a more traditional social security system. One criticism of a privatized system is that consumers are not sufficiently financially literate to make saavy decisions when it comes to selecting among funds in a way that takes into account commissions/fees and fund performance. Another concern is that consumers may not understand risk-return relationships and may therefore tend to take on too much risk.

The main goal of this project is to evaluate the effect of Chile’s pension system rules and regulations on individuals’ contribution patterns. The few empirical studies on the Chilean Pension System have been limited to the use of aggregate and macro data. This project’s contribution is to analyze pension contribution patterns under the Chilean AFP system using micro data and state-of-the-art modeling methods.

Medicare, the main health insurer for the elderly, has recently experienced the biggest reform since its inception: the inclusion of prescription drug coverage for its beneficiaries. Most discussion of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 has focused on the cost of implementing this new policy, leaving unexplored the quantification of its benefits. In fact, very little is known about the effect this policy will have on health outcomes, life expectancy and the substitution from more expensive modes of medical care, such as inpatient care.