Can subjective mortality expectations and stated preferences explain varying consumption and saving behaviors among the elderly?
Inhalt
This study investigates how subjective mortality expectations and heterogeneity in time and
risk preferences affect the consumption and saving behavior of the elderly. Previous studies
find that the large wealth disparities observed among the elderly cannot be explained by
differences in preferences. In contrast, this study identifies a strong relationship between
answers to survey questions about time and risk preferences and consumption and saving
behaviors. This paper uses data on information about preferences and subjective mortality
expectations from the Health and Retirement Study merged with detailed consumption data
from two waves of the Consumption and Activities Mail Survey. The main results are: 1)
consumption and saving choices vary with subjective mortality rates in a way that is
consistent with the life cycle model; 2) different answers to survey questions about time and
risk preferences reflect differences in actual saving and consumption behavior; and 3) there is
substantial heterogeneity in estimated time discount rates and risk aversion parameters.
Publikationsdetails