The
Second AGE RTN Workshop was held in Naples, on 8-10 May 2003, at the Hotel
Mediterraneo and organised by the University of Salerno. The Workshop aimed at
assessing the economic decisions of the elderly, with particular care to
retirement, saving, portfolio choice, health expenditures, and
intergenerational transfers.
The
first day of the Workshop, the 8th of May, was devoted to training
of young researchers and hosted four lectures, two organized by the AGE
network and two by the Financing
Retirement in Europe (FINRET)
network. This FINRET network involves several European departments of
economics, finance and research centres and deals with the financial sides of
pension systems and reforms. The
AGE lectures analyzed retirement within the framework of the life-cycle model.
The first lecture was given by Martin Browning (CAM, University of Copenhagen), focused on the “Living
standards before and after retirement” and inquired the ability of the
life-cycle model in explaining individual behavior after retirement. The
lecture suggested to enrich the standard life-cycle by looking the pattern of
substitution between households and market production, especially for poor
households. Michael Hurd (RAND) gave the second lecture on “The
Life-Cycle model: Singles and couples”.
The lecture provided a theoretical framework to analyze consumption of couples
around retirement, documented that dissaving increases with age, especially
for single, consistently with the life-cycle model in the US, and pointed out
that no evidence on the issue exists for the EU countries.
On
the 9th and 10th of May, twelve papers by young
researchers and network participants were presented and discussed. The 9th
May session hosted eight papers, four in the morning, and four in the
afternoon. James Banks (IFS) presented the paper “Housing
wealth over the life-cycle in the presence of house price volatility”.
The paper argued that the absence of suitable financial products to insure the
risk induces individuals to invest in housing early in the life cycle as a way
of insuring future price fluctuations. The paper by Dimitris Georgarakos
(University of Cyprus) of “Risky
assets ownership by the elderly in the UK: Evidence from the retirement survey”
analyzed the portfolio behavior of the elderly in the UK and showed that
the receipt of a lump sum transfer and the inheritance of a property are
important determinants of risky asset ownership. Loriana Pelizzon (University
of Padua) in the paper “Are household
portfolios efficient? An analysis conditional on housing” analyzed
household portfolios for home-owners and non home-owners and showed that the
presence of illiquid wealth can explain portfolio choices by home-owners.
Federica Teppa (University of Turin) explained the choice between an annuity
and a lump sum capital option upon retirement in Swiss pension funds in the
paper “The personal discount rate:
Evidence from Swiss pension funds”. Antoine
Bommier (GREMAQ and INRA) presented a paper on “Valuing life under the shadow of death”. The paper develops an
axiomatic construction of preferences that allows to compare lotteries
involving lives of different lengths and so to understand how the risk of
death may be expected to affect intertemporal choices. In “A panel model of the effect of health changes on individual
retirement plans, retirement program costs and labour market policy”, Mona
Larsen (University of Copenhagen) investigated the effects of health
changes on retirement plans. The presentation by Matthew
Wakefield (IFS) of “Health and
retirement in Britain: A panel-data based analysis” focused on the
relevance of health conditions for retirement decisions. The last paper of the
day, “Joint labor supply of older
couples”, was given by Pierre-Carl
Michaud (CentER, University of Tilburg), documented the labor force
participation dynamics of older couples in the United States and showed that
the spouse allowance has a positive significant effect on the participation of
husbands, a negative significant effect on the participation of wives and that
wives tend to increase their labor supply if their husband’s health status
deteriorates.
On
the 10th of May four papers were given. Lothar Essig (University of
Mannheim) discussed the effect of interviewers and the survey design on
non-response in the paper “Item
non-response to financial question in household surveys: An experimental study
of interviewer and mode effects”. Tiziana Brancaccio (University of
Dublin) analyzed why the estimates of the offset between social security
wealth and private wealth are far from the perfect substitution predicted by
the life cycle model in the paper “Misinformation
and retirement wealth”. Rob Alessie (University of Tilburg) discussed
the role played by habit formation in individual preferences in the paper “Saving and habit formation: Evidence from Dutch panel data”.
Finally, the paper by Agar Brugiavini (University of Venice) on “Social
security, private transfers and voting behavior” explored the political
sustainability of the current Italian welfare state and argued that Italian
“pensioners” households transfer part of their benefits to non-emancipated
kids, hence tilting the voting behavior of younger generations in favor of
social security.
