The impact of individual investment behavior for retirement welfare: evidence from the United States and Germany

Arbeitspapier

Much of the industrialized world is undergoing a significant demographic shift, placing strain on public pension systems. Policymakers are responding with pension system reforms that put more weight on privately managed retirement funds. One concern with these changes is the effect on individual welfare if individuals invest suboptimally. Using micro-level data from the United States and Germany, we compare the optimal expected lifetime utility computed using a realistically calibrated model with the actual utility as reflected in empirical asset allocation choices. Through this analysis, we are able to identify the population subgroups with relatively large welfare losses. Our results should be helpful to public policymakers in designing programs to improve the performance of privately organized retirement systems.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB 649 Discussion Paper ; No. 2008,037

Classification and Topics

• Classification: Wirtschaft ; Household Saving; Personal Finance ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Portfolio Choice; Investment Decisions ; Financial Institutions and Services: Government Policy and Regulation ; General Welfare; Well-Being
• Subject: Asset allocation ; retirement welfare ; pension reform ; Private Rentenversicherung ; Anlageverhalten ; Erwartungsnutzen ; Lebensverlauf ; Wohlfahrtseffekt ; Deutschland ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Post, Thomas ; Gründl, Helmut ; Schmit, Joan ; Zimmer, Anja
• Event: Veröffentlichung
• (who): Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk
• (where): Berlin
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/25279
• Last update: 10.03.2025, 11:42 AM CET