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La Follette School hosts 900 public policy experts

November 1, 2006

The Robert M. La Follette School of Public Affairs at the University of Wisconsin–Madison will welcome more than 900 public policy experts to a national conference this week at the Monona Terrace Convention Center.

The La Follette School is the host for the annual fall research conference of the Association for Public Policy Analysis and Management. The conference is titled “Tax and Spend: Designing, Implementing, Managing and Evaluating Effective Redistributional Polices,” and will be held from Thursday, Nov. 2, through Saturday, Nov. 4.

At the conference, 10 La Follette School faculty members are giving presentations or chairing sessions. In addition, La Follette School professor David Weimer, the current APPAM president, will deliver his plenary address. Weimer will speak on the problem of designing appropriate forms of medical governance, the processes through which policy makers allocate medical resources.

Conference research sessions will address numerous policy issues, with sessions on welfare reform, Social Security, health policy, Medicaid reform, urban redevelopment, marriage, environment, school choice, education, poverty and school finance, among others.

Retirement savings, home mortgage tax credits and pensions are among the public policy topics on which La Follette School faculty are presenting their research.

Here are some highlights:

Scholars examine adequacy of retirement savings: Whether people have enough resources to escape poverty or near poverty at the time they retire is the subject of a paper three La Follette School of Public Affairs professors will present Thursday, Nov. 2, at 2 p.m. at the session “Social Security and Retirement: What Reforms are Needed?”

In “The Sufficiency of Retirement Savings: A Comparison of Two Cohorts of Retired Workers at the Time of Retirement,” Robert Haveman, Karen Holden and Barbara Wolfe, and co-author Andrei Romanov of the economics department, examine two groups of retirees, one that initiated Social Security benefits in 1980-81 and a second that started drawing benefits in the mid 1990s.

The authors obtain information on the financial resources of the older population in each of these groups, their Social Security and private pension benefits, and value of their home (if they own one). From this information, they calculated the annual resources that the retirees had available to support their level of living in retirement.

These researchers find that, on average, those retiring in the mid 1990s had more wealth and hence the ability to support a higher standard of living than the 1980s group, Wolfe says. “However, people who lacked education and skills, who did not work consistently, or who were unmarried were more likely to be poor in retirement in the 1990s than in the 1980s.”

“The problem is distribution of wealth,” Wolfe says. “On average, people have enough resources, but people on the lower end of the economic scale are clearly worse off now than they were in the 1980s.”

Public pension systems correlate to reduced poverty among older women: Pamela Herd explores what the United States can learn from pension systems in other countries in her presentation. The structure of U.S. private and public pension systems means that older American women are significantly more likely to be poor than their counterparts in other countries.

Herd presents at the session “Gender, Race, and Class in Retirement: Views From the United States and Europe” at 9:30 a.m. on Friday, Nov. 3.

“Women are more likely to avoid poverty when they are old in countries with public pension systems,” Herd says. “Older women in the United States generally have not held full-time employment for as long as men and they generally worked lower paying jobs. Both these factors mean their pensions are less than those men receive.”

Herd’s paper examines pensions in Western Europe, discusses Social Security and explores the effects of applying a more European model to the United States. In particular, she emphasizes that the tendency in the United States to link benefits to marital status, as opposed to the work involved in raising children or more general minimum income guarantees, explains the higher poverty rates among older women in the United States, compared to Western Europe.

Changes in tax policy could boost home ownership: Reforming the way in which federal tax policy subsidizes home ownership could increase home ownership rates among minority and low-income households, according to research to be presented by Andrew Reschovsky.

He and co-author Richard Green of George Washington University examine the impact on home ownership rates of a proposal to eliminate the mortgage interest deduction and to replace it with a 15 percent mortgage interest tax credit.

This proposal was part of the final recommendations of President Bush’s Advisory Panel on Federal Tax Reform.

Reschovsky and Green also will look at the effect of an optional mortgage interest credit plan that would allow all taxpayers to choose between the existing deduction and a refundable mortgage interest credit.

“One important benefit of a refundable credit is that it would increase tax subsidies for lower-income home owners who don’t itemize their taxes,” Reschovsky says. “A larger tax benefit for home ownership for low-income people would make housing more affordable and thus increase ownership, especially among groups that traditionally have low ownership rates.”

Reschovsky presents the research Saturday, Nov. 4, at 1:15 p.m. in the panel “Home Ownership.”

While almost 69 percent of all households were home owners in 2005, the homeownership rate for African Americans was 48.8 percent, Reschovsky says. For non-Hispanic whites, the rate was 76 percent, while 49 percent of Hispanic households owned homes.

“While well over 90 percent of families in the top income quintile are home owners, the home ownership rate is 40 percent for those in the bottom income quintile,” he adds.