Wagner Seminar Series ― Brigitte Madrian

Presented by the Wagner Doctoral Program

November
16
12:30pm - 2:00pm EST
Private
Date:
November 16, 2017
Time:
12:30pm - 2:00pm
Location:
The Puck Building - 295 Lafayette Street, The Rudin Family Forum for Civic Dialogue, 2nd Floor, New York, NY 10012

Aetna Professor of Public Policy and Corporate Management, John F. Kennedy School of Government, Harvard University

https://scholar.harvard.edu/bmadrian/home

 

Borrowing to Save? The Impact of Automatic Enrollment on Debt

 

Abstract: How much of the retirement savings induced by automatic enrollment is offset by increased borrowing outside the retirement savings plan? We study a natural experiment created when the U.S. Army began automatically enrolling its newly hired civilian employees into the Thrift Savings Plan at a default contribution rate of 3% of income. We find that four years after hire, automatic enrollment causes no statistically significant change in debt excluding auto loans and first mortgages (point estimate = 0.3% of income, 95% confidence interval = [-1.7%, 2.3%]). Automatic enrollment does increase auto loan and first mortgage balances, but these liabilities have muted effects on net worth because they are used to acquire an asset.

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