TY  - JOUR
AU  - Bernheim,B. Douglas
AU  - Scholz,John Karl
TI  - Private Saving and Public Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4215
PY  - 1992
Y2  - November 1992
UR  - http://www.nber.org/papers/w4215
L1  - http://www.nber.org/papers/w4215.pdf
N1  - Author contact info:
B. Douglas Bernheim
Department of Economics
Stanford University
Stanford, CA 94305-6072
Tel: 650/725-8732
Fax: 650/725-5702
E-Mail: bernheim@stanford.edu

John Karl Scholz
University of Wisconsin - Madison
Department of Economics
1180 Observatory Drive
Madison, WI 53706
Tel: 608/262-5380
Fax: 608/263-3876
E-Mail: jkscholz@facstaff.wisc.edu
M1  - published as B. Douglas Bernheim, John Karl Scholz. "Private Saving and Public Policy," in James Poterba, editor, "Tax Policy and the Economy, Volume 7" MIT Press (1993)

M2  - featured in NBER digest on 1993-02-01
AB  - The evidence presented in this paper supports the view that many Americans, particularly those without a college education, save too little. Our analysis also indicates that it should be possible to increase total personal saving among lower income households by encouraging the formation and expansion of private pension plans. It is doubtful that favorable tax treatment of capital income would stimulate significant additional saving by this group. Conversely, the expansion of private pensions would probably have little effect on saving by higher income households. However, these households are more likely to increase saving significantly in response to favorable tax treatment of capital income. Currently, eligibility for IRAs is linked to an AGI cap, and pension coverage is more common among higher income households than among low income households. The most effective system for promoting personal saving would have precisely the opposite features. Extending tax incentives for saving to higher income households is problematic. We discuss three competing policy options, IRAs with AGI caps, the universal IRA, and the Premium Saving Account (PSA). Our analysis reveals that the PSA system is a more cost-effective vehicle for providing saving incentives to, all households, particularly those in the top quintile of the income distribution.
ER  -