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Consumption and Children

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Author Info

  • Martin Browning

    (Institute of Economics, University of Copenhagen)

  • Mette Ejrnæs

    (Institute of Economics, University of Copenhagen)

Abstract

Several recent papers have concluded that precautionary saving motives are needed to reconcile data on lifetime patterns of consumption and income with a standard optimising model. In this paper we contest that we necessarily need a precautionary motive and we show that if we take consumption to take proper account of the number and ages of children, then adjusted consumption does not track income. We do not infer from this that children are the sole cause of the rise in consumption in the early part of life but simply that the data we have are not informative enough to convincingly identify the cause of the rise.

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File URL: http://www.econ.ku.dk/cam/wp0910/wp0203/2002-06.pdf/
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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics in its series CAM Working Papers with number 2002-06.

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Length: 28 pages
Date of creation: Aug 2002
Date of revision:
Handle: RePEc:kud:kuieca:2002_06

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Related research

Keywords: consumption; children; precautionary motive; life-cycle;

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Cited by:
  1. James Feigenbaum & Geng Li, 2008. "Lifecycle Dynamics of Income Uncertainty and Consumption," Working Papers 360, University of Pittsburgh, Department of Economics, revised Jul 2008.
  2. van de Ven, Justin, 2011. "A structural dynamic microsimulation model of household savings and labour supply," Economic Modelling, Elsevier, vol. 28(4), pages 2054-2070, July.
  3. Negrusa, Brighita & Oreffice, Sonia, 2010. "Sexual Orientation and Household Savings: Do Homosexual Couples Save More?," IZA Discussion Papers 4961, Institute for the Study of Labor (IZA).
  4. Thomas Crossley & Hamish Low & Cormac O'Dea, 2012. "Household consumption through recent recessions," IFS Working Papers W12/13, Institute for Fiscal Studies.
  5. Miguel Sánchez Romero & Joze Sambt & Alexia Prskawetz, 2012. "Quantifying the role of alternative pension reforms on the Austrian economy," MPIDR Working Papers WP-2012-026, Max Planck Institute for Demographic Research, Rostock, Germany.
  6. Bick, Alexander & Choi, Sekyu, 2012. "Revisiting the Effect of Household Size on Consumption Over the Life-Cycle," MPRA Paper 41756, University Library of Munich, Germany.
  7. Feigenbaum, James, 2008. "Can mortality risk explain the consumption hump?," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 844-872, September.
  8. Bullard, James & Feigenbaum, James, 2007. "A leisurely reading of the life-cycle consumption data," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2305-2320, November.
  9. Thomas F. Crossley & Krishna Pendakur, 2002. "Consumption Inequality," Department of Economics Working Papers 2002-09, McMaster University.
  10. David A. Love, 2010. "The Effects of Marital Status and Children on Savings and Portfolio Choice," Review of Financial Studies, Society for Financial Studies, vol. 23(1), pages 385-432, January.
  11. Frank Caliendo & Kevin X.D. Huang, 2007. "Overconfidence and Consumption over the Life Cycle," Vanderbilt University Department of Economics Working Papers 0712, Vanderbilt University Department of Economics.
  12. Carl-Johan Dalgaard & Holger Strulik, 2012. "The Genesis of the Golden Age - Accounting for the Rise in Health and Leisure," Discussion Papers 12-10, University of Copenhagen. Department of Economics.
  13. Brighita Negrusa & Sonia Oreffice, 2011. "Sexual orientation and household financial decisions: evidence from couples in the United States," Review of Economics of the Household, Springer, vol. 9(4), pages 445-463, December.
  14. Marek Loužek, 2010. "Microeconomic Foundations of Reproductive Behaviour," Politická ekonomie, University of Economics, Prague, vol. 2010(3), pages 374-391.
  15. Shantanu Bagchi, 2011. "Can overconfidence explain the consumption hump?," Journal of Economics and Finance, Springer, vol. 35(1), pages 41-70, January.

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