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SOCIAL SCIENCE RESEARCH NETWORK
E M P L O Y E E B E N E F I T S , C O M P E N S A T I O N
& P E N S I O N L A W
Vol. 7, No. 11: May 11, 2006
Editor: PAMELA J. PERUN
Urban Institute
PAMELA@PLANETNOW.COM
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Topic of This Issue:
Retirement
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T A B L E O F C O N T E N T S
"How Sensitive are Seniors to the Price of Prescription Drugs?"
JONATHAN KLICK
Florida State University College of Law
THOMAS STRATMANN
George Mason University - Buchanan Center
Political Economy, CESifo (Center for Economic
Studies and Ifo Institute for Economic Research)
"Some Answers to the Retirement-Consumption Puzzle"
MICHAEL D. HURD
The RAND Corporation, State University of New
York - Department of Economics, National Bureau of
Economic Research (NBER)
SUSANN ROHWEDDER
The RAND Corporation
"Employment-Based Retirement Plan Participation: Geographic
Differences and Trends, 2004"
CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
"Retirement Plan Participation and Retirees' Perception of Their
Standard of Living"
CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
"Retirement Annuity and Employment-Based Pension Income, Among
Individuals Ages 50 and Over: 2004"
KENNETH J. MCDONNELL
Employee Benefit Research Institute (EBRI)
"Will More of Us Be Working Forever? The 2006 Retirement
Confidence Survey"
RUTH HELMAN
Mathew Greenwald & Associates
CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
JACK VANDERHEI
Temple University - Risk Management & Insurance &
Actuarial Science, Employee Benefit Research
Institute (EBRI)
"Counting Retirement Expenditures Before They Hatch: GASB and
the New Reporting Requirements for Other Postemployment Benefits"
WILLIAM R. VOORHEES
Arizona State University - School of Public
Affairs
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"How Sensitive are Seniors to the Price of Prescription Drugs?"
FSU College of Law, Law and Economics Paper No. 05-17
FSU College of Law, Public Law Research Paper No. 161
Contact: JONATHAN KLICK
Florida State University College of
Law
Email: jklick@law.fsu.edu
Auth-Page: http://ssrn.com/author=289102
Co-Author: THOMAS STRATMANN
George Mason University - Buchanan
Center Political Economy, CESifo (Center for
Economic Studies and Ifo Institute for Economic
Research)
Email: tstratma@gmu.edu
Auth-Page: http://ssrn.com/author=103632
Full Text: http://ssrn.com/abstract=766844
ABSTRACT: This study estimates the demand curve for prescription
drugs among elderly Medicare beneficiaries. In contrast to
previous work, the current analysis uses a measure of price
rather than insurance status as the key explanatory variable to
test for seniors' sensitivity to prescription drug price changes.
The estimates show that a one percentage point increase in the
coinsurance rate implies a 1.01 percent decrease in the number of
prescriptions filled and a 0.69 percent decrease in total drug
expenditures. This finding indicates that seniors are far more
responsive to prescription drug price changes than suggested by
studies that examine younger individuals or those that do not
control for self-selection into supplemental insurance plans.
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"Some Answers to the Retirement-Consumption Puzzle"
NBER Working Paper No. W12057
Contact: MICHAEL D. HURD
The RAND Corporation, State
University of New York - Department of Economics,
National Bureau of Economic Research (NBER)
Email: mhurd@RAND.ORG
Auth-Page: http://ssrn.com/author=158591
Co-Author: SUSANN ROHWEDDER
The RAND Corporation
Email: Susannr@rand.org
Auth-Page: http://ssrn.com/author=340388
Full Text: http://ssrn.com/abstract=885654
ABSTRACT: The simple one-good model of life-cycle consumption
requires consumption smoothing. According to previous results
based on partial spending and on synthetic panels, British and
U.S. households apparently reduce consumption at retirement. The
reduction cannot be explained by the simple one-good life-cycle
model, so it has been referred to as the retirement-consumption
puzzle. An interpretation is that at retirement individuals
discover they have fewer economic resources than they had
anticipated prior to retirement, and as a consequence reduce
consumption. This interpretation challenges the life-cycle model
where consumers are assumed to be forward-looking. Using panel
data, we find that prior to retirement workers anticipated on
average a decline of 13.3% in spending and after retirement they
recollected a decline of 12.9%: widespread surprise is not the
explanation for the retirement-consumption puzzle. Workers with
substantial wealth both anticipated and recollected a decline.
Therefore, for many workers the decline is not necessitated by
the fall in income that accompanies retirement. Poor health is
associated with above-average declines. At retirement time spent
in activities that could substitute for market-purchased goods
increases. Apparently a number of factors contribute to the
decline in spending, which, for most of the population, can be
accommodated in conventional models of economic behavior.
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"Employment-Based Retirement Plan Participation: Geographic
Differences and Trends, 2004"
EBRI Issue Brief, No. 286, October 2005
Contact: CRAIG COPELAND
Employee Benefit Research Institute
(EBRI)
Email: COPELAND@EBRI.ORG
Auth-Page: http://ssrn.com/author=255137
Full Text: http://ssrn.com/abstract=849365
ABSTRACT: This paper examines the level of participation by
workers in public- and private-sector employment-based pension or
retirement plans, based on the U.S. Census Bureau's March 2005
Current Population Survey (CPS), the most recent data currently
available. It begins with an overview of retirement plan types
and participation in these types of plans. Next, it describes the
data used in this study, along with their relative strengths and
weaknesses. From these data, results on participation in
employment-based retirement plans are analyzed for 2004 across
various worker characteristics and those of their employers. The
paper then explores retirement plan participation across U.S.
geographic regions, including a state-by-state comparison and a
comparison of certain consolidated statistical areas (CSAs). In
addition to the results for 2004, trends from 1987-2004 in
employment-based retirement plan participation are presented
across the same worker characteristics and those of their
employers as used for 2004. The paper concludes with a discussion
of its findings.
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"Retirement Plan Participation and Retirees' Perception of Their
Standard of Living"
EBRI Issue Brief, No. 289, January 2006
Contact: CRAIG COPELAND
Employee Benefit Research Institute
(EBRI)
Email: COPELAND@EBRI.ORG
Auth-Page: http://ssrn.com/author=255137
Full Text: http://ssrn.com/abstract=876991
ABSTRACT: This paper focuses on a critical factor in retirement
security: the presence of income or assets from an
employment-based retirement plan. It is the third in a series of
EBRI publications based on the Retirement and Pension Plan
Coverage Topical Module of the 2001 Survey of Income and Program
Participation (SIPP), which has a wealth of data on workers'
participation in these plans as well as the plans'
characteristics and features. This report examines SIPP's more
detailed questions concerning workers' participation in
employment-based and other retirement plans.
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"Retirement Annuity and Employment-Based Pension Income, Among
Individuals Ages 50 and Over: 2004"
EBRI Notes, Vol. 27, No. 3, March 2006
Contact: KENNETH J. MCDONNELL
Employee Benefit Research Institute
(EBRI)
Email: MCDONNELL@EBRI.ORG
Auth-Page: http://ssrn.com/author=297121
Full Text: http://ssrn.com/abstract=891822
ABSTRACT: This paper looks at one slice of the income pie of the
older population: retirement annuities and employment-based
pensions. It analyzes the population ages 50 and over in order to
take into account the prevalence of early retirement options
available to individuals beginning at age 50. Recent data from
the March 2005 Current Population Survey, conducted by the U.S.
Census Bureau, confirm earlier findings that gender, marital
status, age, education, and other demographic variables have a
significant impact on the likelihood of a worker receiving a
retirement annuity and/or employment-based pension income in
retirement. There may also be a strong correlation between these
same variables and the amount of pension income received from
employment-based retirement plans.
The PDF for the above title, published in the March 2006 issue of
EBRI Notes, also contains the fulltext of another March 2006 EBRI
Notes article abstracted on SSRN: "Retirement Plans and
Retirement Confidence in Higher Education."
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"Will More of Us Be Working Forever? The 2006 Retirement
Confidence Survey"
EBRI Issue Brief, No. 292, April 2006
Contact: RUTH HELMAN
Mathew Greenwald & Associates
Email: RUTHHELMAN@GREENWALDRESEARCH.COM
Auth-Page: http://ssrn.com/author=263460
Co-Author: CRAIG COPELAND
Employee Benefit Research Institute
(EBRI)
Email: COPELAND@EBRI.ORG
Auth-Page: http://ssrn.com/author=255137
Co-Author: JACK VANDERHEI
Temple University - Risk Management &
Insurance & Actuarial Science, Employee Benefit
Research Institute (EBRI)
Email: TEMPLE@VANDERHEI.COM
Auth-Page: http://ssrn.com/author=265706
Full Text: http://ssrn.com/abstract=897751
ABSTRACT: This paper reports findings from the 16th annual
Retirement Confidence Survey (RCS), which suggest that many
American workers are not ready to undertake the task of financial
planning for their retirement and face the prospect of having to
work far longer than they expect. The RCS finds that Americans
have opinions and behaviors that hinder their ability to
realistically assess the preparations needed to ensure a
financially secure retirement. While a majority of Americans have
made some financial preparations, saving is more likely to take
place when encouraged by an employer-provided retirement savings
plan, such as a 401(k), than when left solely to individual
initiative. Moreover, the findings suggest that although
education has been moderately successful at boosting retirement
preparation, options that default workers into more desirable
retirement planning behavior may also have their place.
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"Counting Retirement Expenditures Before They Hatch: GASB and
the New Reporting Requirements for Other Postemployment Benefits"
Public Budgeting & Finance, Vol. 25, No. 4, pp. 59-71,
December 2005
Contact: WILLIAM R. VOORHEES
Arizona State University - School of
Public Affairs
Email: William.Voorhees@asu.edu
Auth-Page: http://ssrn.com/author=362418
Full Text: http://ssrn.com/abstract=857743
ABSTRACT: In June of 2004, the Governmental Accounting Standards
Board issued a new standard that requires governments to place
other postemployment benefits on their books. Previously these
obligations were reported on a cash basis. Under the new
standard, expenses and liabilities will be accrued over the life
of the employee's service. Governments that fail to fully fund
these new expenses will be required to post a liability to their
books.