Short-term planning and the life-cycle consumption puzzle

Preprint OPEN
Frank Caliendo; David Aadland;
(2004)
  • Subject: Short-term planning, Hump-shaped consumption
    • jel: jel:D1 | jel:D2 | jel:D3 | jel:D4

This paper provides a new explanation for the hump-shaped age- consumption profile observed in household data. Standard life-cycle models are based on an optimization problem that spans the entire life expectancy. Alternatively, we examine the consumption profile of an ... View more
  • References (8)

    Akerlof, George A. and William R. Dickens (1982), The Economic Consequences of Cognitive Dissonance. American Economic Review 72(3), 307-319.

    Ameriks, John, Andrew Caplin, and John Leahy (2003), Wealth Accumulation and the Propensity to Plan. Quarterly Journal of Economics 68, 1007-1047.

    Attanasio, Orazio, James Banks, Costas Meghir, and Guglielmo Weber (1999), Humps and Bumps in Lifetime Consumption. Journal of Business and Economic Statistics 17(1), 22-35.

    Browning, Martin and Thomas F. Crossley (2001), The Life-cycle Model of Consumption and Saving. Journal of Economic Perspectives 15(3), 3-22.

    Bullard, James and James Feigenbaum (2003), A Leisurely Reading of the Life-cycle Consumption Data. Working paper.

    Bütler, Monika (2001), Neoclassical Life-cycle Consumption: A Textbook Example.

    Economic Theory 17, 209-221.

    Figure 1. Work life consum ption (10 year planning w indow ) Figure 2. Work life consum ption (15 year planning w indow ) 25 30 35 40 50 55 60 65 25 30 35 40 50 55 60 65 45

  • Related Organizations (2)
  • Metrics
Share - Bookmark