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This paper shows how Danish administrative register data can be combined with survey data at the person level and be used to validate information collected in the survey. Register data are collected by automatic third party reporting and the potential errors associated with the two data sources are therefore plausibly orthogonal. Two examples are given to illustrate the potential of combining survey and register data. In the first example expenditure survey records with information about total expenditure are merged with income tax records holding information about income and wealth. Income and wealth data are used to impute total expenditure which is then compared to the survey measure. Results suggest that the two measures match each other well on average. In the second example we compare responses to a one-shot recall question about total gross personal income (collected in another survey) with tax records. Tax records hold detailed information about different types of income and this makes it possible to test if errors in the survey response are related to the reporting of particular types of income. Results show bias in the mean and that the survey error has substantial variance. Results also show that the errors are correlated with conventional covariates suggesting that the errors are not of the classical type. The latter example illustrates how Denmark can be used as a “laboratory” for future validation studies. Tax records with detailed information about different types of income are available for the entire Danish population and can be readily merged to survey data. This makes it possible to test the ability of respondents to accurately report different types of income using different interviewing techniques and questions. The examples presented in this paper are based on cross section data. However, the possibility to issue surveys repeatedly to the same persons and linking up to longitudinal tax records provides an opportunity to learn more about the time series properties of measurement errors, a subject about which little evidence exist, in the future.

Zonder onderwerpscode: economie

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Do retirement savings policies {96} such as tax subsidies or employer-provided pension plans {96} increase total saving for retirement or simply induce shifting across accounts? We revisit this classic question using 45 million observations on savings for the population of Denmark. We find that a policy's impact on total savings depends critically on whether it changes savings rates by active or passive choice. Tax subsidies, which rely upon individuals to take an action to raise savings, have small impacts on total wealth. We estimate that each {dollar}1 of tax expenditure on subsidies increases total saving by 1 cent. In contrast, policies that raise savings automatically even if individuals take no action {96} such as employer-provided pensions or automatic contributions to retirement accounts {96} increase wealth accumulation substantially. Price subsidies only affect the behavior of active savers who respond to incentives, whereas automatic contributions increase savings of passive individuals who do not reoptimize. We estimate that 85% of individuals are passive savers. The 15% of active savers who respond to price subsidies do so primarily by shifting assets across accounts rather than reducing consumption. These individuals also o{0B}set changes in automatic contributions and have higher wealth-income ratios. We conclude that automatic contributions are more effective at increasing total retirement savings than price subsidies for three reasons: (1) subsidies induce relatively few individuals to respond, (2) they generate substantial crowdout conditional on response, and (3) they do not influence the savings behavior of passive individuals, who are least prepared for retirement

Zonder onderwerpscode: economie

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We exploit a mortgage reform that differentially unlocked home equity across the Danish population and study how this impacted selection into entrepreneurship. We find that increased entry was concentrated among entrepreneurs whose firms were founded in industries where they had no prior work experience. In addition, we find that marginal entrants benefiting from the reform had higher pre-entry earnings and that a significant share of entrants started longer-lasting firms. Our results are most consistent with the view that housing collateral enabled high ability individuals with less-well-established track records to overcome credit rationing and start new firms, rather than just leading to `frivolous entry' by those without prior industry experience.

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Jobs increasingly require good decision-making. Workers are valued not only for how much they can do, but also for their ability to decide what to do. In this paper we develop a theory and measurement paradigm for assessing individual variation in the ability to make good decisions about resource allocation, which we call allocative skill. We begin with a model where agents strategically acquire information about factor productivity under time and effort constraints. Conditional on such constraints, agents' allocative skill can be defined as the marginal product of their attention. We test our model in a field survey where participants act as managers assigning fictional workers with heterogeneous productivity schedules to job tasks and are paid in proportion to output. Allocative skill strongly predicts full-time labor earnings, even conditional on IQ, numeracy, and education, and the return to allocative skill is greater in decision-intensive occupations.

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Despite its centrality in monetary policy, communication is not a focus in social security reform. We investigate the potential for active communication to dissipate apparently widespread public confusion about the future of social security. We implement a simple information treatment in which we randomly provide survey respondents access to the longevity-based eligibility age implemented by reform that Denmark launched in 2006. Absent treatment, younger workers not only have biased beliefs, expecting to become eligible for social security earlier than policy makers intend, but also are highly uncertain about eligibility age. The information treatment eliminates the bias, suggesting it results from misunderstanding. Yet it has no influence on uncertainty, suggesting this is driven by unavoidable demographic and political uncertainties. Our results highlight the value of communication strategies and belief measurement as policy instruments outside the monetary policy arena.