Review of Economic Studies Vol. 53 No. 4 1986

Tax-Deferred Accounts, Constrained Choice and Estimation of Individual Saving

Steven F. Venti^1,2; David A. Wise^3,4,5

¹ Dartmouth College · ² Dartmouth Hospital · ³ Harvard University · ⁴ Harvard University Press · ⁵ Dana-Farber/Harvard Cancer Center

Abstract

The paper analyzes the effect of tax-deferred individual retirement accounts (IRAs) in the United States on net individual saving. The results are based on a model of constrained optimization with the limit on tax-deferred saving the principle constraint. The estimates suggest that contributions to IRAs represent substantial net saving increases. Were the IRA limit to be increased, only about 10 to 20% of resulting increase in IRA contributions would be taken from other savings. About 50% would come from reduced consumption and about 35% from reduced taxes.

DOI

10.2307/2297607

Volume

53

Issue

4

Pages

579

Sources

crossref openalex bibtex:phds-export.bib

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