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Durable Purchases over the Later Life Cycle

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  • Martin Browning

    (University of Oxford and Institute for Fiscal Studies)

  • Thomas Crossley

    ()
    (Koc University, Institute for Fiscal Studies and University of Cambridge)

  • Melanie Lührmann

    (Royal Holloway, University of London and Institute for Fiscal Studies)

Abstract

We investigate the life cycle patterns of households' ’spending on medium value durables. We use panel data on expenditures on appliances and consumer electronics the British Household Panel Study between 1997 and 2008. In cross section, expenditures for appliances and consumer electronics decrease strongly as households age. We show that this is entirely attributable to cohort effects and that when such effects are properly modelled, expenditure on consumer electronics rises with age. We also document important demand effects of household composition, labour supply and health status.

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File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1213.pdf
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Bibliographic Info

Paper provided by Koc University-TUSIAD Economic Research Forum in its series Koç University-TUSIAD Economic Research Forum Working Papers with number 1213.

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Length: 36 pages
Date of creation: May 2012
Date of revision:
Handle: RePEc:koc:wpaper:1213

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Keywords: life cycle model; consumer behaviour; durables.;

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  1. Michael Hurd & Susann Rohwedder, 2006. "Some Answers to The Retirement-Consumption Puzzle," Working Papers 342, RAND Corporation Publications Department.
  2. Michael D. Hurd & Susann Rohwedder, 2005. "Changes in Consumption and Activities in Retirement," Working Papers wp096, University of Michigan, Michigan Retirement Research Center.
  3. Melanie Lührmann, 2010. "Consumer Expenditures and Home Production at Retirement - New Evidence from Germany," German Economic Review, Verein für Socialpolitik, vol. 11, pages 225-245, 05.
  4. Michael Hurd & Susann Rohwedder, 2005. "The Retirement-Consumption Puzzle: Anticipated and Actual Declines in Spending at Retirement," Working Papers 242, RAND Corporation Publications Department.
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  13. Arie Kapteyn & R. Alessie & Annamaria Lusardi, 2003. "Explaining the wealth holdings of different cohorts: productivity growth and social security," Working Papers 01-03, Utrecht School of Economics.
  14. Sarah Smith, 2006. "The retirement-consumption puzzle and involuntary early retirement: Evidence from the British Household Panel Survey," The Centre for Market and Public Organisation 06/138, Department of Economics, University of Bristol, UK.
  15. James Banks & Richard Blundell & Sarah Tanner, 1995. "Is there a retirement-savings puzzle?," IFS Working Papers W95/04, Institute for Fiscal Studies.
  16. Martin Browning & Thomas F. Crossley, 2004. "Shocks, stocks and socks: smoothing consumption over a temporary income loss," CAM Working Papers 2004-05, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  17. Lundberg, Shelly & Startza, Richard & Stillman, Steven, 2003. "The retirement-consumption puzzle: a marital bargaining approach," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1199-1218, May.
  18. Raffaele Miniaci & Chiara Monfardini & Guglielmo Weber, 2003. "Is there a retirement consumption puzzle in Italy?," IFS Working Papers W03/14, Institute for Fiscal Studies.
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