Can 401(k) accumulations generate significant income for future retirees?

This Issue Brief develops a model that project the proportion of an individual's preretirement income that might be replaced by 401(k) plan accumulations at retirement, under several different projected scenarios. The 401(k) participant behaviors in the model are based on the year-end 2000 database collected by the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) in their collaborative effort known as the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. The most significant factor affecting projected replacement rates at retirement is having access to a 401(k) plan. Projected replacement rates from 401(k) accumulations at retirement are reduced significantly when participants are not offered a 401(k) plan in all portions of their careers. Most 401(k) participants tend to have contributions in any given year. Thus, projecting that participants always have contributions (their own and/or employer contributions) every year raises projected replacement rates, but not by much compared with the importance of being offered a plan to begin with. The model simulations show that participant activities such as taking loans, taking preretirement withdrawals, or cashing out account balances at job change reduce projected 401(k) accumulations and thus replacement rates at age 65. Because loans are forecast to be paid back to the account in full, their effect on replacement rates at retirement in the model is the smallest. Even if equity returns in the future are projected to replicate the worst 50-year segment in the Standard & Poor's (S&P) 500 history (1929 to 1978), 401(k) accumulations are still projected to replace significant proportions of projected preretirement income. Another projection scenario forecasts participants experiencing a simulated three-year bear market (negative equity returns) either early in their careers, near the middle of their careers, or at the end of their careers. Forecasts of the effects of bear markets on 401(k) balances show that a bear market in equities is projected to have the largest effect the closer it occurs to age 65 (retirement), even though older participants typically have diversified their portfolios away from equities. A three-year bear market for those early in their careers would reduce median replacement rates from 401(k) accumulations by an estimated 2.9-3.7 percentage points, compared with 13.4-17.7 percentage points for those immediately before retirement. Similarly, a simulated three-year bull market (positive equity returns) is projected to have a larger positive effect on projected account balances and replacement rates the closer it occurs to retirement.     

Safety Risk Analysis of an Innovative Environmental Technology

The authors describe a decision and risk analysis performed for the cleanup of a large Department of Energy mixed-waste subsurface disposal area governed by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In a previous study, the authors worked with the site decision makers, state regulators, and U.S. Environmental Protection Agency regional regulators to develop a CERCLA-based multiobjective decision analysis value model and used the model to perform a screening analysis of 28 remedial alternatives. The analysis results identified an innovative technology, in situ vitrification, with high effectiveness versus cost. Since this technology had not been used on this scale before, the major uncertainties were contaminant migration and pressure buildup. Pressure buildup was a safety concern due to the potential risks to worker safety. With the help of environmental technology experts remedial alternative changes were identified to mitigate the concerns about contaminant migration and pressure buildup. The analysis results showed that the probability of an event with a risk to worker safety had been significantly reduced. Based on these results, site decision makers have refocused their test program to examine in situ vitrification and have continued the use of the CERCLA-based decision analysis methodology to analyze remedial alternatives.     

The Effects of a Stimulus-Stimulus Pairing Procedure on the Vocal Behavior of Children Diagnosed with Autism

The Analysis of Verbal Behavior - Recent research suggests that the sound produced by a child’s vocalization can become a conditioned reinforcer via the temporal pairing of an...     

The Abative Effect: A New Term to Describe the Action of Antecedents that Reduce Operant Responding

The Analysis of Verbal Behavior - Behavior-analytic terminology concerning the so-called inhibitory effect of operant antecedents lacks precision. The present paper describes the problem with...     

Estimating Increment-Decrement Life Tables with Multiple Covariates from Panel Data: The Case of Active Life Expectancy*

A fundamental limitation of current multistate life table methodology-evident in recent estimates of active life expectancy for the elderly-is the inability to estimate tables from data on small longitudinal panels in the presence of multiple covariates (such as sex, race, and socioeconomic status). This paper presents an approach to such an estimation based on an isomorphism between the structure of the stochastic model underlying a conventional specification of the increment-decrement life table and that of Markov panel regression models for simple state spaces. We argue that Markov panel regression procedures can be used to provide smoothed or graduated group-specific estimates of transition probabilities that are more stable across short age intervals than those computed directly from sample data. We then join these estimates with increment-decrement life table methods to compute group-specific total, active, and dependent life expectancy estimates. To illustrate the methods, we describe an empirical application to the estimation of such life expectancies specific to sex, race, and education (years of school completed) for a longitudinal panel of elderly persons. We find that education extends both total life expectancy and active life expectancy. Education thus may serve as a powerful social protective mechanism delaying the onset of health problems at older ages.     

Population control and politics

At all times and places population and resources must be kept in balance with each other if a high, or at least acceptable, quality of life is to be maintained. Evidence is presented that thinkers and men and women of affairs have been aware of these necessities from time immemorial and that the ancients invented most of the basic concepts of modern population ecology, at leastin embryo. This task is a problem of social control, the central process in all societies. If society's controllers and their institutions are aware, intelligent, flexible, and suitably motivated, there is no reason why most problems of population, development, and pollution should not be solved and then kept permanently in check. This must involve politics, there is no way out. As Aristotle pointed out, "Man is a political animal," and it is only through politicking that we can set up, maintain, change, and generally operate our social control systems. Deeply dysfunctional attitudes towards freedom and control—especially population control—are described and analysedvia a ten-stage argument, and helpful proposals put forward. The function which scientists in general and social scientists in particular can perform in helping human-kind to solve its complex and manifold problems is heavily stressed. Scientists in general should not become politicians, but politicians in general should become numerate and "ecolate"—to quote Garrett Hardin, and start to think more deeply and longer-term. To focus practical thinking the concepts "survival-theory" and the "principle of minimum innovation" are set forth and a final plea made for the necessity and therefore moral legitimacy of controlling numbers as well as resources. If population control seems slow in returning—it used to be the norm—recent events in Eastern Europe give good grounds for optimism about the fluidity of both human values and political institutions.     

Relative Risk Aversion: What Do We Know?

The relative risk aversion measure that represents the risk preferences of a decision maker depends on the outcome variable that is used as the argument of the utility function, and on the way that outcome variable is defined or measured. In addition, the relationship between any two such relative risk aversion measures is determined by the relationship between the corresponding outcome variables. These well-known facts are used to adjust several reported estimates of relative risk aversion so that those estimates can be directly compared with one another. After adjustment, the significant variation in the reported relative risk aversion measures for representative decision makers is substantially reduced. JEL Classification: D81     

SPECTRAL ANALYSIS IN BUSINESS FORECASTING*

Although spectral analysis has previously been discussed in a number of business journals, the discussion has not been detailed enough for non-mathematicians. The objective of this paper is to review in detail the concepts and to go over the computations of spectral analysis as they pertain to forecasting. To gain insight into the model building technique of spectral analysis, a passing comparison with a familiar model–regression–is made. Regression analysis attempts to find a set of independent variables that shed some light on the dependent variable to be forecasted. In other words, if the independent variables have some functional relationship with the dependent variable, a reliable forecast of the dependent variable can then be made. Forecasting using spectral analysis, on the other hand, is based on the assumption that the variation of a time series can be explained by some mixture of sine and cosine waves. Model parameters can then be estimated for these waves and forecasts be made. These parameters have the same property of least squares as in ordinary regression analysis. A transformation of these parameters gives the spectra of the time series. The spectra are related to the explained variation present in regression analysis. An extension of the spectra gives a set of coefficients of an autoregressive forecasting model. This latter model is referred to as the Wiener-Kolmogorov forecasting model.     

Ecological influences on parenting and child development

Summary The development of children and young people and their subsequentlife chances in adulthood are the product of a complex set ofinteracting factors, at individual, family and community levels.An ecological framework is used to examine the mutual influencesbetween the different systems that are important during childhood.The links between poverty and health and the influence of socialexclusion and structural inequalities on family and communityfunctioning are considered in some depth, utilizing findingsfrom a wide range of research disciplines, in different partsof the world. The identification, development and protectionof sources of informal social support, available to familiesliving in impoverished circumstances, are identified as keytasks for social workers and other welfare professionals. Togetherwith features of resiliency, found amongst children and familiescoping successfully in high-risk environments, this knowledgeis used to point the way towards features of effective, ecologicalassessment and intervention strategies.     

Population recovery in New Orleans after Hurricane Katrina: exploring the potential role of stage migration in migration systems

In this research brief, we explore how places affected by natural disasters recover their populations through indirect, or “stage,” migration. Specifically, we consider the idea that post-disaster impediments (e.g., housing and property damage) in disaster-affected areas spawn migration flows toward and, over time, to disaster-affected areas through intermediary destinations. Taking as our case Orleans Parish over a 5-year period after Hurricane Katrina, we show that stage migration accounted for up to about one-fourth of population recovery. We close by discussing the implications, limitations, and potential extensions of our work.