Mitchell, Olivia S
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Publication Financial Literacy, Schooling, and Wealth Accumulation(2010-09-28) Behrman, Jere R; Mitchell, Olivia S; Soo, Cindy; Bravo, DavidFinancial literacy and schooling attainment have been linked to household wealth accumulation. Yet prior findings may be biased due to noisy measures of financial literacy and schooling, as well as unobserved factors such as ability, intelligence, and motivation that could enhance financial literacy and schooling but also directly affect wealth accumulation. Here we use a new household dataset and an instrumental variables approach to isolate the causal effects of financial literacy and schooling on wealth accumulation. While financial literacy and schooling attainment are both strongly positively associated with wealth outcomes in linear regression models, our approach reveals even stronger and larger effects of financial literacy on wealth. It also indicates no significant positive effects of schooling attainment conditional on financial literacy in a linear specification, but positive effects when interacted with financial literacy. Estimated impacts are substantial enough to suggest that investments in financial literacy could have large positive payoffs.Publication Pension Payouts in Chile: Past, Present, and Future Prospects(2009-08-01) Mitchell, Olivia S; Ruiz, JoseOne of the most interesting features of the Chilean pension system is that approximately two-thirds of all retirees purchase annuities, resulting in annuitization rates much higher than in other countries. In this paper we review recent developments in the payout market for Chilean pensions, focusing particularly on the role of annuities, and we discuss what makes the payout market in Chile so different from those in other nations.Publication Cross-Cohort Differences in Health on the Verge of Retirement(2006-09-01) Soldo, Beth J; Mitchell, Olivia; Tfaily, Rania; McCabe, JohnBaby Boomers have left a unique imprint on US culture and society in the last 60 years, and it might be anticipated that they will also put their own stamp on retirement, the last phase of the life cycle. Yet because Boomers have not all fully retired, we cannot yet judge how they will fare as retirees. Instead, we focus on how this group compares with prior groups on the verge of retirement, that is, at ages 51-56. Accordingly, this chapter evaluates the stock of health which Early Boomers bring to retirement and compare these to the circumstances of two prior cohorts at the same point in their life cycles. Using three sets of responses from the Health and Retirement Study, we find some interesting patterns. Overall, the raw evidence indicates that Boomers on the verge of retirement are in poorer health their counterparts 12 years ago. Using a summary health index designed for this study, we find that those born 1948 to 1953 share health risks with the War Baby cohort. This suggests that most of the health decline instead began before the late 1940ās. A more complex set of health conclusions emerges from the specific self-reported health measures. Boomers indicate they have relatively more difficulty with a range of everyday physical tasks, but they also report having more pain, more chronic conditions, more drinking and psychiatric problems, than their HRS earlier counterparts. This trend portends poorly for the future health of Boomers as they age and incur increasing costs associated with health care and medications. Using our health index, only those at the 75th percentile or higher are likely to be characterized as having good or better health.Publication Health Problems as Determinants of Retirement: Are Self-Rated Measures Endogenous?(1998-03-01) Dwyer, Debra Sabatini; Mitchell, Olivia S.We explore alternative measures of unobserved health status in order to identify effects of mental and physical capacity for work on older menās retirement. Traditional self-ratings of poor health are tested against more objectively measured instruments. Using the Health and Retirement Study (HRS), we find that health problems influence retirement plans more strongly than do economic variables. Specifically, men in poor overall health expected to retire one to two years earlier, an effect that persists after correcting for potential endogeneity of self-rated health problems. The effects of detailed health problems are also examined in depth.Publication First-Round Impacts of the 2008 Chilean Pension System Reform(2011-02-17) Behrman, Jere R; Calderon, Maria Cecilia; Mitchell, Olivia; Vasquez, Javiera; Bravo, DavidChileās innovative privatized pension system has been lauded as possible model for Social Security system overhauls in other countries, yet it has also been critiqued for not including a strong safety net for the uncovered sector. In response, the Bachelet government in 2008 implemented reforms to rectify this shortcoming. Here we offer the first systematic effort to directly evaluate the reformās impacts, focusing on the new Basic Solidarity Pension for poor households with at least one person age 65+. Using the Social Protection Survey, we show that targeted poor households received about 2.4 percent more household annual income, with little evidence of crowding-out of private transfers. We also suggest that recipient household welfare probably increased due to slightly higher expenditures on basic consumption including healthcare, more leisure hours, and improved self-reported health. While measured short-run effects are small, follow-ups will be essential to gauge longer-run outcomes.Publication Construction of the Earnings and Benefits File (EBF) for Use With the Health and Retirement Survey(1996) Mitchell, Olivia; Olson, Jan; Steinmeier, ThomasThis paper documents the Earnings and Benefits File (EBF). The EBF is a restricted dataset created for researchers working with the Health and Retirement Survey (HRS) under a set of limited access conditions. The EBF and all derived variables contained therein are intended for research purposes only, by registered users of the public use file of the Health and Retirement Survey, and may be linked only with HRS files containing no geographic detail below the Census Division level. Details on the rationale for, and definitions of, constructed employment, earnings, and social security wealth variables in the EBF are provided, as well as a bibliography for those wishing additional information on the rules by which social security earnings data are used in calculating benefits. The EBF contains information derived for respondents of the 1992 Health and Retirement Survey who authorized the University of Michiganās Institute for Social Research to obtain administrative records from the Social Security Administration. The EBF is described below, first in conceptual terms in Part I, and then in more technical detail in Part II. Appendices contain a detailed layout of variables and codebook for the data file along with additional descriptive statistics.Publication 1994-95 Advisory Council On Social Security Technical Panel on Trends and Issues in Retirement Saving Final Report(1995-09-29) Mitchell, Olivia; Quinn, Joseph; Atkins, G. Lawrence; Burkhauser, Richard; Burtless, Gary; Clark, Robert; Paul, Peter D.; Haley, John; Halperin, Daniel; Hanushek, Eric; Macunovich, Diane; Salisbury, Dallas; Shoven, John; Zeldes, StephenThe charge of the Technical Panel on Trends and Issues in Retirement Savings (TIRS) was to "assist the 1994-95 [Social Security] Advisory Council with respect to its charge to analyze the relative roles of the public and private sectors in the provision of retirement income, particularly how underlying policies of public and private programs, including relevant tax laws, affect retirement decisions and the economic status of the elderly."Publication The Dynamics of Lifecycle Investing in 401(k) Plans(2008-08-01) Mitchell, Olivia S; Mottola, Gary; Yamaguchi, Takeshi; Utkus, StephenThe introduction of lifecycle funds into 401(k) plans offers a rich environment in which to assess workersā 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 conclude that recent legislation encouraging riskier 401(k) portfolios will modify investment patterns, with the rate of change varying according to whether behavioral or rational elements dominate in a given setting.Publication The Chilean Pension Reform Turns 25: Lessons from the Social Protection Survey(2006-07-01) Behrman, Jere R; de Mesa, Alberto Arenas; Mitchell, Olivia S; Bravo, DavidIn 1980, Chile dramatically reformed its retirement system, replacing what was an old insolvent PAYGO program with a new structure that relies heavily on funded defined contribution individual accounts. In addition, eligibility and benefit requirements were standardized, and a safety net for old-age poverty was strengthened. Twenty-five years after this reform, the Chilean model is being re-assessed, in terms of coverage, contribution, investment, and retirement benefit outcomes. This paper introduces a recently-developed longitudinal survey of individual respondents in Chile, the Social Protection Survey (or Encuesta de PrevisiĆ³n Social, EPS), and illustrates some uses of this survey for microeconomic analysis of key aspects of the Chilean system.