Tax Policy and the Economy.

• Position: Conferences

The NBER's Sixteenth Annual Conference on TAX POLICY and the Economy, organized by James M. Poterba of NBER and MIT, took place in Washington, D.C. on October 30. These papers were discussed:

Robert Moffitt, NBER and Johns Hopkins University, "The Economic Effects of Means-Tested Transfer Programs"

James J. Choi, Harvard University; David Laibson, NBER and Harvard University; Brigitte Madrian, NBER and University of Chicago; and Andrew Metrick, NBER and University of Pennsylvania, "Defined Contribution Pensions: Plan Rules, Participant Choices, and the Path of Least Resistance"

Jonathan Gruber, NBER and MIT, "Taxes and Health Insurance"

Charles E. McLure, Jr., NBER and Stanford University, "Thinking Straight About the Taxation of Electronic Commerce: Tax Principles, Compliance Problems, and Nexus"

Ryan Edwards and Ronald Lee, University of California at Berkeley, "The Fiscal Impact of Population Aging in the United States: Assessing the Uncertainties"

Martin S. Feldstein, NBER and Harvard University, and Andrew A. Samwick, NBER and Dartmouth College, "Potential Paths of Social Security Reform"

The system of means-tested transfers in the United States has evolved in important ways over the last decade: the Medicaid program and the Earned Income Tax Credit program have expanded significantly and the Aid to Families with Dependent Children (AFDC) program, now titled the Temporary Assistance for Needy Families program, has contracted. Further, AFDC has undergone a significant restructuring, with an increased emphasis on work requirements. These trends, as well as others in earlier decades, represent a gradual movement toward a categorical transfer system in which specific low-income groups are offered different packages of benefits and services. This represents a decisive rejection of the negative income tax philosophy. Moffitt reviews the trends in the structure of the major means-tested programs and what economic research has to say about their effects on behavior.

Choi, Laibson, Madrian, and Metrick analyze a new micro-level dataset that contains a number of natural experiments on institutional variation in 401(k) plan rules. They measure the impact of 401(k) plan features, including investment defaults, rollovers, employer matching contributions, eligibility requirements, and financial education. They also present new survey evidence on savings adequacy. Their analysis identifies a key behavioral principle that should partially guide the...