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Consumption Habits and Humps
(2015-07-10)
We show that the optimal consumption of an individual over the life cycle can have the hump shape (inverted U-shape) observed empirically if the preferences of the individual exhibit internal habit formation. In the absence ...
Life Insurance Demand under Health Shock Risk
(2015-06-03)
This paper studies the life cycle consumption-investment-insurance problem of a family. The wage earner faces the risk of a health shock that significantly increases his probability of dying. The family can buy long-term ...
Consumption and Wage Humps in a Life-Cycle Model with Education
(2015-02-24)
The observed hump-shaped life-cycle pattern in individuals’ consumption cannot be explained by the classical consumption-savings model. The consensus explanation is that the hump is caused by constraints and unspanned ...
Housing Habits and Their Implications for Life-Cycle Consumption and Investment
(2017-01-26)
We solve a rich life-cycle model of household decisions involving consumption of perishable goods and housing services, habit formation for housing consumption, stochastic labor income, stochastic house prices, home renting ...
Predictors and Portfolios Over the Life Cycle
(2018-06-08)
In a calibrated consumption-portfolio model with stock, housing, and labor income predictability, we evaluate the welfare effects of predictability on life-cycle consumption-portfolio choice. We compare skilled investors ...
Putting the Pension Back in 401(k) Plans: Optimal versus Default Longevity Income Annuities
(2016-09-29)
Most defined contribution pension plans pay benefits as lump sums, yet the US Treasury has recently encouraged firms to protect retirees from outliving their assets by converting a portion of their plan balances into ...
How Persistent Low Expected Returns Alter Optimal Life Cycle Saving, Investment, and Retirement Behavior
(2017-06-23)
This Chapter explores how an environment of persistent low returns influences saving, investing, and retirement behaviors, as compared to what in the past had been thought of as more “normal” financial conditions. Our ...
Implications of Money-Back Guarantees for Individual Retirement Accounts: Protection Then and Now
(2019-10-21)
In the wake of the financial crisis and continued volatility in international capital markets, there is growing interest in mechanisms that can protect people against retirement account volatility. This paper explores the ...
Exposure to the COVID-19 Stock Market Crash and its Effect on Household Expectations
(2020-05-21)
We survey a representative sample of US households to study how exposure to the COVID-19 stock market crash affects expectations and planned behavior. Wealth shocks are associated with upward adjustments of expectations ...
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Historical financial database with over 35 million individual instruments or indicators across all major asset classes, including 8.5 million active economic indicators. It features 70 years of data, across 175 countries ...