SAVINGS INCENTIVES FOR LOW‐AND MODERATE‐INCOME FAMILIES IN THE UNITED STATES: WHY IS THE SAVER'S CREDIT NOT MORE EFFECTIVE?
This paper uses data from the largest tax preparer in the United States to estimate the impact of the "saver's credit," a US federal program providing financial incentives to encourage retirement savings, on the decision to contribute to an IRA. It finds significant, but very modest, effects. This is contrasted with results from a field experiment showing much larger impacts of clearly presented matching incentives. Various explanations are discussed for why the saver's credit is not more effective. (JEL: H00, H31, C93, D14) (c) 2007 by the European Economic Association.