Wealth

The nature of the relationship between lifetime income and saving rates is a longstanding empirical question and one that has been surprisingly difficult to answer. We use a new data set containing both individual survey data on wealth holdings and administrative data on earnings histories to examine this question.

BACKGROUND: Literature suggests that the higher the rate of time preference people have, the less likely they are to save for the future. Likewise, it has been hypothesised that rising rates of being overweight/obesity are associated with an increase in peoples' marginal rate of time preference.

Andrew Hood contributed an article to this bulletin titled 'The changing generosity of private pension provision and its differential effects across generations'

Background: It is not clear whether the harm associated with smoking differs by socioeconomic status. This study tests the hypothesis that smoking confers a greater mortality risk for individuals in low socioeconomic groups, using a cohort of 18 479 adults drawn from the English Longitudinal Study of Ageing. Additive hazards models were used to estimate the absolute smoking-related risk of death due to lung cancer or Chronic Obstructive Pulmonary Disease (COPD). Smoking was measured using a continuous index that incorporated the duration of smoking, intensity of smoking and the time since cessation. Attributable death rates were reported for different levels of education, occupational class, income and wealth. Smoking was associated with higher absolute mortality risk in lower socioeconomic groups for all four socioeconomic indicators. For example, smoking 20 cigarettes per day for 40 years was associated with 898 (95% CI 738, 1058) deaths due to lung cancer or COPD per 100 000 person-years among participants in the bottom income tertile, compared to 327 (95% CI 209, 445) among participants in the top tertile. Smoking is associated with greater absolute mortality risk for individuals in lower socioeconomic groups. This suggests greater public health benefits of smoking prevention or cessation in these groups.

This note has been written in the run-up to the 2017 general election. IFS Election 2017 analysis is being produced with funding from the Nuffield Foundation as part of its work to ensure public debate in the run-up to the general election is informed by independent and rigorous evidence.

Redistribution by means of lotteries

We put forward a method for estimating discount rates using wealth and income data. We build consumption from these data using the budget constraint. Consumption transitions yield discount rates by household groups. Applying this technique to a sample of older households, we find a similar distribution to those previously estimated using field data, though with a much lower mean than those found using experiments. Surprisingly, among this older population, patience is negatively correlated with education and numeracy. This goes against the positive correlation found for younger populations in experiments and some field studies. We discuss potential explanations for this result.

This paper investigates the effect of income- and wealth-based poverty on the probability of being obese for the elderly in Europe by analysing data drawn from the Survey of Health, Ageing and Retirement (SHARE) and the English Longitudinal Study of Ageing (ELSA). We use early-life economic conditions and regional circumstances as instruments for poverty later in life to account for endogeneity issues. After controlling for a large set of covariates at the individual, household, regional and country level, the results show that poverty significantly increases the probability of being obese and the Body Mass Index (BMI), for men and women. The results show that, accounting for endogeneity with a bivariate probit model, poor individuals are from 10 to 20% points more likely to be obese than non-poor individuals. The effect on BMI ranges from 0.295 points (2.39 kg) to 0.395 points (2.75 kg). These results are robust to a series of checks and suggest that anti-poverty interventions might have positive side effects in terms of reducing food-related health inequalities.

We use data on household incomes from the Family Resources Survey, together with OBR macroeconomic forecasts and announced changes in tax and benefit policy, to project household incomes up to 2021–22.

This note presents some tentative first evidence from a natural field experiment to shed light on how different types of potential donors: individuals, corporates and aristocratically titled individuals, respond to the same fundraising drive.

Inheritances and Inequality across and within Generations

Wealth and Disability in Later Life: The English Longitudinal Study of Ageing (ELSA)

From an economic perspective, imposing a credibly one-off net wealth levy in times of crisis as a tool to ward off a national emergency appears to be advantageous as, in an ideal world, this would not distort market players’ allocation decisions. However, in practice, charging such a levy may give rise to distortions and unwanted effects on the real economy.