Humps and bumps in lifetime consumption

Published on 1 January 1999

This Journal article has been replaced by Humps and bumps in lifetime consumption

In this article we argue that the life-cycle model that allows demographics to affect household preferences and relaxes the assumption of certainty equivalence can generate hump-shaped consumption profiles over age that are very similar to those observed in household-level data sources.

In this article we argue that the life-cycle model that allows demographics to affect household preferences and relaxes the assumption of certainty equivalence can generate hump-shaped consumption profiles over age that are very similar to those observed in household-level data sources and, in particular, match the differences in shape across different education groups. Liquidity constraints or myopia are not required to explain the empirical features of observed life-cycle patterns.

Authors

James Banks

CPP Co-Director

James is Senior Research Fellow and Professor of Economics at Manchester, working on broad issues in the economics of retirement, savings and health.

Orazio Attanasio

Orazio Attanasio

CPP Co-Director

Orazio is an International Research Fellow at the IFS, a Professor at Yale and a Research Associate at the National Bureau of Economic Research.

Costas Meghir

Research Fellow Yale University

Costas is a Research Fellow of the IFS and a Professor of Economics at Yale University and a Visiting Professor at University College London.

Guglielmo Weber

Guglielmo Weber

Research Associate University of Padua

Guglielmo is a Research Associate at the IFS and Professor in the Department of Economics at the Faculty of Statistics, Padua University.