How Much Do Teachers Value Compensation Deferred for Retirement? Evidence From Defined Contribution Rate Choices

Dados Bibliográficos

ID9730729
AutoresDan Goldhaber (0000-0003-4260-4040, American Institutes for Research/CALDER, Washington, DC, autor correspondente), Kristian L Holden (American Institutes for Research/CALDER, Washington, DC)
Ano2023
Volume52
Fascículo2
Páginas80-90
Data de publicação2023-03-01
Peer ReviewedSim
Open AccessSim
TipoARTICLE
PeriódicoEducational Researcher (JOURNAL)
Identificadores do periódicoISSN: 0013-189X • E-ISSN: 1935-102X
EditoraAmerican Educational Research Association (AERA) (PUBLISHER)
DOI10.3102/0013189x21999665
OpenAlexW4321215898
IdiomaEN
Citações recebidas2
Referências citadas37

How much do teachers value compensation deferred for retirement (CDR)? This question is important because the vast majority of public school teachers are covered by defined benefit pension plans that “backload” a large share of compensation to retirement relative to the compensation structure in the private sector, and there is scant evidence about whether pension structures are consistent with teacher preferences for current compensation versus CDR. This study examines a unique setting in Washington State, where teachers are enrolled in a hybrid pension system that has both defined benefit and defined contribution components. We exploit the fact that teachers have choices over their defined contribution rate to infer their revealed preferences for current versus CDR. We find that teachers on average contribute 7.23% of salary income toward retirement; 62% in fact elect to contribute more than the minimally required contribution of 5%. This suggests that teachers value CDR far more than suggested by prior evidence

Actuarial science · Compensation (psychology · Demographic economics · Economics · Labour economics · Pension · Salary · Statistics · Value (mathematics · Finance · Financial Literacy, Pension, Retirement Analysis · Gender, Labor, and Family Dynamics · Housing Market and Economics · Psychology · Social Psychology