Reforming Social Security and the Private Retirement Saving System
FACULTY SUPERVISOR(S):
John Geanakoplos and Cormac O'Dea
PROJECT DESCRIPTION:
The position will entail working approximately half-time on each of two separate projects related to U.S. retirement security. The pre-doc will work with Yale professors John Geanakoplos and Cormac O’Dea, as well as professors Stephen Zeldes (Columbia), Taha Choukhmane (MIT), and Lawrence Schmidt (MIT).
Project I
In this project, Professors John Geanakoplos (Yale) and Stephen Zeldes (Columbia), will analyze the U.S. Social Security system and develop a set of evidence-based proposals to reform it. The project will include the following:
i) Historical data collection – we have assembled historical data on Social Security cash flows by year and cohort since the founding of the system in 1935. We will continue to refine these data and incorporate new data.
ii) Historical analysis – what caused the imbalance? Quantify the financial impact of each of the demographic and structural shifts that have led the system to the brink of bankruptcy. These include changes in the number of children per family, changes in longevity, and most importantly, the “legacy costs” associated with the pay-as-you-go system, whereby early recipients of Social Security received full benefits after making small contributions.
iii) Modeling – develop a microsimulation model for forecasting Social Security cash flows into the indefinite future. This model will allow for counterfactual projections under different macroeconomic and demographic scenarios.
iv) Empirical analysis – use both individual-level microeconomic data and macroeconomic data to inform the nature and likelihood of future scenarios.
v) Theoretical analysis – examine and develop models of optimal risk-sharing and taxation. Develop asset pricing techniques to value future Social Security cash flows, taking into account contingent future interest rates and wage growth. How should you value your Social Security benefits, and how should society realistically value the Social Security deficit?
vi) Policy – design and evaluate potential policies to restore and automatically maintain solvency of the system into the future, taking into account the distributional effects of any proposed reform.
Project II
In this project, Professors Cormac O’Dea (Yale), Taha Choukhmane (MIT) & Lawrence Schmidt (MIT) will study the U.S. Defined Contribution (DC) retirement system. The authors have put together an extensive data set on the largest 5,000 US DC plans over the years 2003-2018 and merged in tax records to create a new employee-employer linked data set. A feature of the US retirement saving landscape are substantial incentives to save – the more an employee saves, the more their employer often contributes to their retirement account.
The projects will include:
i) A study of who benefits from the hundreds of billions of dollars annually dedicated to encouraging retirement saving in the US.
ii) A study of how individuals respond to retirement saving incentives. Do they increase their saving in retirement accounts at the expense of their saving in other accounts? Do they increase their total saving? How do these responses differ by individual characteristics?
iii) A study of how having more wealth in one’s retirement account, as a result of generous employer contributions, impacts the outcomes of one’s children.
Specific duties for the two projects will include:
• Collect, clean, link, and maintain economic datasets. Prepare detailed documentation.
• Develop economics and statistical models and implement program codes in common statistical and mathematical programming languages (e.g., Stata, Python, MATLAB, R).
• Perform data analyses, including regression analysis and forecasting
• Perform case-based research, including work with detailed primary documents.
• Assist with the writing of research papers, including the preparation of literature reviews .
• Assist with economic theory, including modeling socially efficient risk sharing between generations and optimal taxation.
• Work on the transition for both projects with current pre-doc Jackson Howell.
REQUISITE SKILLS AND QUALIFICATIONS:
The work will include both quantitative and qualitative analysis, involving the collection, coordination, and management of data and other research materials. This position provides an opportunity to gain experience in academic economics research and would be good preparation for a Ph.D. program in economics, finance, or related fields.
Applicants for the position are expected to have the following:
• Programming experience in at least one statistical language (e.g. Stata or R) is required.
• Familiarity with statistical tools such as linear regression is required.
• Exceptional written and oral communications skills – a writing sample is required
SPECIAL APPLICATION INSTRUCTIONS:
Applicants must have (prior to starting the position) a Bachelor’s or Master’s degree in i) Economics or Finance or ii) a quantitative discipline such as Mathematics, Statistics, or Engineering with coursework in Economics and Finance.
Please submit a writing sample and a sample of code that you have written with your application.