This revised proposal seeks to study the saving and insurance decisions of Boston University's (BU's) 7,726 employees. The researchers are the PIs, Jagadeesh Gokhale of the Federal Reserve Bank of Cleveland, and Mark Warshawsky of TIAA-CREF. The study uses a novel financial planning software program, Economic Security PlannerTM (ESPlannerTM), developed by Economic Security Planning, Inc. Specifically, BU's employees will be invited to use ESPlanner and provide the results of their financial planning sessions to the researchers on a confidential and anonymous basis. The study addresses four issues: 1) the adequacy of household saving and life insurance holdings, 2) which subgroups are prone to undersave and underinsure, 3) does financial guidance improve financial preparedness, and 4) are the determinants of saving and insurance those predicted by theory. The reviewers provided important suggestions and raised these concerns: 1) insufficient attention to time-allocation problems, expectations of capital gains and household bargaining issues, 2) no evidence from a pilot study that the data to be collected will be of higher quality or that the rate of participation in the proposed study will be sufficiently high, 3) failure to discuss the unique research advantages of the data to be collected, 4) failure to present results for the HRS and SCF data sets, 5) lack of specificity of the problem being solved by ESPlanner and its algorithm, 6) reliability of self-reported earnings expectations, 7) the need to educate ESPlanner's users about rates of return, 8) the time per ESPlanner session, 9) the need to use participation in BU's tax-favored saving plans to understand selection bias, 10) the need to collect information about and from the BU benefits officer assisting BU employees using ESPlanner, 11) the need to understand the spouse's as well as the employees behavioral changes in response to using ESPlanner. The revision addresses each of these concerns.
