2013 Conference
April 10–12, 2013
The Benson Hotel, Portland, Oregon
This section lists poster sessions as well as concurrent sessions by day, time, and room. Concurrent sessions have multiple presentations. You may search by title, author names, or keyword. A Schedule-at-a-Glance is posted on the Website and will provide the overview. This is the detail.
Bounded Rationality Strikes Again: The Impact of Cognitive Ability and Financial Planners on Roth IRA Adoption and Ownership
Major Area of Focus
Financial Services
Secondary area of focus
Financial Services
Short Abstract
Roth IRAs were introduced in the late 1990s and provide another option for tax-sheltered retirement savings. Because determining the benefits of a Roth IRA is a complex decision, we hypothesize that cognitive ability and having a financial planner have significant impacts on the timing and likelihood of using a Roth IRA. Using data primarily from the 2004 and 2008 administrations of the National Longitudinal Survey of Youth (NLSY), we find that cognitive ability and having a financial planner are both positively related to Roth IRA ownership and early adoption. If individuals with higher cognitive ability and/or a financial planner are better able to recognize and implement beneficial tax strategies, then tax policy will yield unintended distributional consequences. A complex tax policy also limits the ability to modify individual behavior in the ways envisioned by policymakers.
Corresponding Author
Benjamin Cummings, Saint Joseph's University
Job Title
Instructor
City & State (or Province & Country)
Philadelphia, PA
Additional Authors
Michael Finke, Ph.D., Texas Tech University
Job Title
Professor
City & State (or Province & Country)
Lubbock, TX
Russell N James, III, J.D., Ph.D., Texas Tech University
Job Title
Associate Professor
City & State (or Province & Country)
Lubbock, TX