DISCOUNTING, COGNITION, AND FINANCIAL AWARENESS: NEW EVIDENCE FROM A CHANGE IN THE MILITARY RETIREMENT SYSTEM.

The choice given military personnel between an immediate cash payment of $30,000 or a more generous retirement pension permits us to estimate individuals' personal discount rates ( PDRs). The resulting PDRs, about 7% for enlisted personnel and 2%-4.3% for officers, are precise and are correlated wit...

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Published in:Economic Inquiry Vol. 53; no. 1; pp. 318 - 335
Main Authors: Simon, Curtis J., Warner, John T., Pleeter, Saul
Format: Article
Published: Wiley-Blackwell Jan2015
Subjects:
Online Access:View this record in EBSCOhost
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        atl: DISCOUNTING, COGNITION, AND FINANCIAL AWARENESS: NEW EVIDENCE FROM A CHANGE IN THE MILITARY RETIREMENT SYSTEM.
      aug:
        au:
          Simon, Curtis J.
          Warner, John T.
          Pleeter, Saul
        affil:
          Department of Economics, Clemson University, 228 Sirrine Hall, Clemson SC, 29634 ‐ 1309
          The Lewin Group, Falls Church VA, 22042
          Department of Economics, American University, Washington DC
      su:
        Pensions
        Economic history
        Government policy
        Military retirements
        American military personnel
        Retirement & economics
      sug:
        subj:
          Pensions
          Economic history
          Government policy
          Trusteed pension funds
          Military retirements
          American military personnel
          Retirement & economics
      ab: The choice given military personnel between an immediate cash payment of $30,000 or a more generous retirement pension permits us to estimate individuals' personal discount rates ( PDRs). The resulting PDRs, about 7% for enlisted personnel and 2%-4.3% for officers, are precise and are correlated with a variety of other financial behaviors. The PDR is negatively related to educational attainment and the Armed Forces Qualification Test, but cognition seems to operate through channels other than being better informed; better-informed individuals were not always measured to be more patient. ( JEL D91, D14)
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    language: English
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