ESTIMATING TEMPTATION AND COMMITMENT OVER THE LIFE CYCLE

This article estimates the importance of temptation for consumption smoothing and asset accumulation in a life‐cycle model. We use two complementary estimation strategies: first, we estimate the model‐implied Euler equation; second, we match liquid and illiquid wealth accumulation using the method of simulated moments. In both cases, we find that the utility cost of temptation is one‐quarter of the utility benefit of consumption. Further, temptation is crucial for correctly estimating the elasticity of intertemporal substitution (EIS): EIS estimates are biased downward when ignoring temptation. Finally, the model only matches the share of illiquid wealth if temptation is in the preference specification.     

“Fair go” for all? Wealth and Risk Aversion of Australian Households*

A mean‐variance framework is applied to Australian household financial portfolios in order to provide estimates of relative risk aversion in the economy. Controlling for various socio‐economic characteristics, we explore whether risk aversion heterogeneity is a function of wealth heterogeneity. In contrast to most studies, we find evidence of very high risk aversion amongst the majority of households of poor households but vastly lower risk aversion amongst the high percentiles in the wealth distribution. Applying a first differences model across three survey waves spanning 2002 to 2010, we find that risk tolerance increases significantly with wealth. Risk tolerance is positively associated with mortgage payments, but rental payments have no relationship. In addition, we found no evidence that holding a university education has any discernible impact on risk aversion. Lastly, we present some preliminary findings as to the impact of financial advice on observed risk aversion. Financial advice is found to accentuating risk aversion, particularly amongst the wealthiest households. The findings have potential implications for the distribution of wealth in Australia that has received renewed interest recently.     

INCOME AND WEALTH OVER THE LIFE CYCLE EVIDENCE FROM PANEL DATA

In this paper we examine household wealth and income in the Netherlands using data from the Socio Economic Panel (SEP) in the period 1987–89. We provide an evaluation of the quality of the data and some simple statistics which describe the behavior of wealth, saving, and income over the life cycle. We find there is substantial heterogeneity in the behavior of households, and wealth holdings vary substantially even among the same age group. By exploiting the panel feature of the SEP, we derive saving from first differencing wealth. We find that a sizeable fraction of households do not dissave when old and we find some evidence in favor of the bequest motive.     

ON THE DISTRIBUTIONAL CONSEQUENCES OF CHILD LABOR LEGISLATION*

This article studies the effects of child labor legislation on human capital accumulation and the distribution of wealth and welfare. We calibrate our model to U.S. data circa 1880 and find that the consequences of restricting child labor or providing tax‐financed education depend on the main source of individual household income. Households with significant financial assets unambiguously lose from government intervention, whereas high‐wage workers benefit most from a child labor ban, and low‐wage workers benefit most from free education. Introducing free education results in substantial welfare gains, whereas a child labor ban induces small welfare losses.     

Do the Rich Save More in Japan? Evidence Based on two Micro Data Sets for the 2000s

Using two household surveys, this paper investigates whether the saving rates of richer households are higher than those of poorer households in Japan. We construct a number of proxies for lifetime wealth, including those original to this study, and find marginally positive correlations between saving rates and lifetime wealth for working age households. We further find that the relationship between saving rates and lifetime wealth differs depending on the life stage of individual households. Older households with higher lifetime wealth appear to be dissaving to some extent, which is more or less consistent with the lifecycle model of consumption.     

VALUING LOST HOME PRODUCTION OF DUAL EARNER COUPLES*

Using a life‐cycle model in which women divide their time between home and market work, we establish a link between retirement wealth and the value of forgone home production. We use data from the Health and Retirement Study to estimate the model's parameters and adjust the growth rate of GDP to reflect reductions in nonmarket output. We find that the value of forgone home production is modest—about 25% of women's measured earnings.     

ASSET‐BASED UNEMPLOYMENT INSURANCE*

This article studies a model of consumption, savings, and job search in which a borrowing constraint limits self‐insurance. The government administers the unemployment insurance program that may condition on an individual’s asset position, but not on her efforts of finding a job. To compensate for the impediments to self‐insurance, benefit payments should optimally be set higher at lower wealth levels and peak for borrowing‐constrained individuals with zero liquid funds. A quantitative exercise reveals that the U.S. unemployment insurance program is surprisingly close to optimal for the asset poor, but far too generous for wealthier individuals.     

THE RELATIONSHIP BETWEEN CONSUMPTION, INCOME AND WEALTH IN HONG KONG

Abstract. This paper estimates a consumption function for Hong Kong along the lines of the standard life‐cycle model. I find a stable relationship between consumption, labour income and wealth with plausible long‐run estimates of the implied marginal propensity to consume out of income and wealth. The marginal propensity to consume out of housing wealth is estimated to be lower than in other industrialized economies, which is consistent with a relatively uneven distribution of wealth in Hong Kong. Arithmetically, the decline in housing wealth in Hong Kong since 1997 can more than account for the weakness of consumption since then.     

Saving,Wealth and the Transition from Transfers to Individual Responsibility: The Cases of Taiwan and the United States*

Under the life‐cycle saving model, population aging leads to an increased demand for life‐cycle wealth. Changes in transfer systems create or destroy one component of life‐cycle wealth—transfer wealth. The decline in the familial transfer system in Taiwan and reform of the US Social Security system are two examples of ways that transfer wealth is reduced. The combined effects of aging and changes in transfer systems are analyzed using simulation analysis. Rapid aging and radical decline in transfer systems lead to a large but transitory surge in aggregate saving. Capital per worker increases rapidly and remains at a high level.     

RETIREMENT WEALTH AND LIFETIME EARNINGS*

This article argues that a satisfactory theory of wealth inequality should account not only for the marginal distribution of wealth, but also for the joint distribution of wealth and earnings. The article describes the joint distribution of retirement wealth and lifetime earnings in the Panel Study of Income Dynamics. It then evaluates the ability of a stochastic life‐cycle model to account for key features of this distribution. The life‐cycle model fails to account for three key features of the data. (1) The correlation between lifetime earnings and retirement wealth is too high. (2) The wealth gaps between earnings rich and earnings poor households are too large. (3) Wealth inequality among households with similar lifetime earnings is too small. Models in which households differ in rates of return or time preferences account much better for the joint distribution of retirement wealth and lifetime earnings.     

不患寡而患不均*——相对生活水平对居民心理健康的影响

幸福感是人们生活质量的重要方面，关乎个人和社会的稳定和发展。然而，最近几十年中国经济持续增长但居民主观幸福感却在下降，与此同时，精神疾病患病率和自杀率不断攀升。本文利用2013年CHARLS数据，以五种不同人群作为参照系，从抑郁症状(CES-D)角度实证考察相对生活水平对中国居民心理健康的影响。工具变量模型显示:第一，相对生活水平对中国居民的心理健康具有显著影响。不同参照系的影响存在明显差异，以同事和同学为参照的相对生活水平对心理健康的影响最大，以本县（市、区）人们为参照的影响最小。第二，生活水平的相对效应存在非对称性，相对生活水平较低引起的心理问题加重的程度明显大于相对生活水平较高带来的心理健康的改善幅度。第三，相比于高收入人群，低收入人群的心理健康更容易受到他人的影响。本文的研究结果较好地反映了当前社会“不患寡而患不均”的状况。因此，缩小收入差距的措施对改善居民的心理健康具有外溢效应。     

Bill Averaging Programs and Consumer Behavior: Theory and Evidence

This paper examines consumer behavior under "bill smoothing," a common pricing program for utility customers where monthly payments are equalized over a one year cycle.First, we offer a theoretical model and conclude that bill smoothing is beneficial to consumers, but leads to exaggerated swings in usage over the yearly cycle. Second, we provide statistical evidence on the determinants of voluntary participation in bill smoothing programs by consumers; financial distress and high usage are less important than generally supposed. Finally, empirical tests of our theoretical model find that (i) participation increases overall consumption; and (ii) bill smoothing leads to exaggerated usage peaks and troughs, a result that could have implications for load management programs and general energy conservation.     

The trajectory of wealth in retirement

In this paper, we develop a measure of household resources that converts total financial and non-financial assets, plus annuity-like assets (mainly, Social Security and defined-benefit pensions) into an expected annual amount of wealth per person in retirement. We use this measure, which we call “annualized comprehensive wealth,” to investigate spend-down behavior among a panel of older households in the Health and Retirement Study (HRS) from 1998 to 2006. Our analysis indicates that for most retired households, comprehensive wealth balances decline much more slowly than their remaining life expectancies, so that the predominate trend is for real annualized wealth to rise significantly with age over the course of retirement. Comparing the estimated age profiles for annualized wealth with profiles simulated from several different life-cycle models, we find that a model that takes into account uncertain longevity, random medical expenses, and intended bequests lines up best with the broad patterns of rising annualized wealth in the HRS.     

Assessing welfare reform data: a comment on christopher

Abstract

This paper responds to Karen Christopher's recent Feminist Economics paper that posits that welfare leavers did not benefit much financially during the Clinton-era economic boom. On the contrary, this paper finds that child poverty rates declined dramatically as did material hardships while the situation worsened for only a very small share of mothers. These benefits came as a result of welfare reform rather than simply an outgrowth of the booming economy that enabled a greater share of welfare leavers to find employment and gain sizeable transfer payments compared to the pre-reform time period.     

The Consequences of Having a Son on Family Wealth in Urban China

Due to the influence of traditional culture, housing is regarded as a status good and plays an important role in improving male competitiveness in the marriage market in China. Using data from a recent household survey, we find that urban families with a son are more likely to own a house, with a larger size, and at an earlier date. With the booming of the Chinese housing market since the late 1990s as background, having a son thus generates a substantial effect on family wealth through the channel of house ownership. Using the gender of the first‐born child as an instrument, our estimation shows that families with a son have 188 thousand RMB yuan higher housing wealth on average.     

Savings and pensions in The Netherlands

We describe the distribution of private wealth of Dutch households over the life cycle and relate this to the size of individual entitlements to pay-as-you-go social security benefits and funded pension benefits. We also investigate saving motives and find that saving for old age plays only a minor role. Precautionary motives play some role, but in view of the very extensive social safety net it does not seem likely that precaution is an important factor in saving decisions. Altogether, the data are consistent with the view that an extensive social safety net and generous old age income provisions reduce the need to accumulate private wealth.     

中国城镇家庭财产水平研究:基于行为的视角

本文首先提出了一个各种因素影响家庭财产水平的理论框架。然后通过对奥尔多投资研究中心2007年"城市投资者行为调查问卷"数据的处理和实证分析,估算了中国城镇居民的财产函数,重点考察了户主的主观行为特征在财产积累过程中的重要作用。本文发现:户主投资参与度与风险偏好度的提高有利于家庭财产水平的增加;与低收入或者经济相对落后地区的家庭相比,对高收入或者经济发达地区的家庭来说,投资参与度与风险偏好度对家庭财产水平的积极影响更显著一些。最后,针对政府如何促进居民财产水平的提升,本文给出了相关的政策建议。     

The Institutionalist Perspective on Recent Theories of Direct Foreign Investment: A Comment on McClintock

This article holistically addresses the effective (relative) income tax contribution of a given income (or, wealth) group. The widely acclaimed standard in public policy is the absolute benefaction of a given income group in filling up the fiscal coffers. Instead, we focus on the ratio of the average income tax rate of an income group divided by the percentage of national income (or wealth) appropriated by the same income group. In turn, we develop the Fiscal Inequality Coefficient which compares the effective percentage income tax payments of pairs of income (or wealth) groups. Using data for the United States, we concentrate on pairs such as the Bottom 90% versus Top 10%, Bottom 99% versus Top 1%, and Bottom 99.9% versus Top 0.1%. We conclude that policy makers with a strong social conscience should re-evaluate the progressivity of the income tax system and make the richest echelons of the income and wealth distributions pay a fairer and higher tax.     

The Taylor Rule,Wealth Effects and the Exchange Rate

In this study, we develop the Taylor rule and Taylor rule‐based exchange rate models that consider wealth effects as represented by both asset prices and asset wealth. Using data for Australia, Sweden, the UK and the USA, we find that effects of asset prices and wealth on the Taylor rule vary depending on the country and on the form that wealth takes. Out‐of‐sample forecasting capacities of the wealth‐augmented Taylor rule model and Taylor rule‐based exchange rate model outperform conventional models and random walk theories for these countries.     

Behavior of Household Portfolios in France: the Role of Housing

The two-dimensional aspects of dwellings occupied by their owner, consumption and investment, make the analysis of households' portfolio choice and the analysis of housing purchases more difficult. But it seems difficult to analyze portfolio decisions without taking account of owner-occupied housing that has an important effect on wealth composition over the life cycle. In this paper we estimated a portfolio choice model where the different dwellings are defined as assets and we showed that we cannot separate investment decisions from housing consumption. Especially, risky assets demand should be greatly influenced by attitudes toward home property.