An experimental test on dynamic consumption and lump-sum pensions
This article examines the potential risks on consumption behavior of lump-sum payments. As a pension, lump-sum payments could be consumed too fast and generate an increase of poverty rates. We experimentally investigate consumption behavior in an inter-temporal decision-making setting. Subjects make consumption and saving decisions in an environment with two central features: first, there exists a decreasing probability of survival; and second, in addition to the regular income they get while active, they receive a unique lump-sum payment when retired. The results of this experiment show that rather than consuming too much during their income periods, subjects show a persistent precautionary saving behavior and over-save in the vast majority of periods. This result seems to be mainly driven by the risk averse individuals. Copyright The Author(s) 2013
Volume (Year): 4 (2013)
Issue (Month): 4 (November)
|Contact details of provider:|| Web page: http://www.springer.com|
Postal:Universidad del País Vasco; DFAE II; Avenida Lehendakari Aguirre, 83; 48015 Bilbao; Spain
Phone: +34 94 6013783
Fax: + 34 94 6013774
Web page: http://www.asesec.org/index.php?idioma=en
More information through EDIRC
|Order Information:||Web: http://www.springer.com/economics/journal/13209|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Breyer, Friedrich & Kifmann, Mathias, 2002.
"Incentives to retire later a solution to the social security crisis?,"
Journal of Pension Economics and Finance,
Cambridge University Press, vol. 1(02), pages 111-130, July.
- Friedrich Breyer & Mathias Kifmann, 2001. "Incentives to Retire Later: A Solution to the Social Security Crisis?," Discussion Papers of DIW Berlin 266, DIW Berlin, German Institute for Economic Research.
- Hamermesh, Daniel S & Menchik, Paul L, 1987.
"Planned and Unplanned Bequests,"
Western Economic Association International, vol. 25(1), pages 55-66, January.
- Fisher, Jonathan D. & Johnson, David S. & Marchand, Joseph & Smeeding, Timothy M. & Torrey, Barbara Boyle, 2008.
"The retirement consumption conundrum: Evidence from a consumption survey,"
Elsevier, vol. 99(3), pages 482-485, June.
- Johnathan Fisher & David S. Johnson & Joseph Marchand & Timothy M. Smeeding & Barbara Boyle Torrey, 2005. "The Retirement Consumption Conundrum: Evidence from a Consumption Survey," Working Papers, Center for Retirement Research at Boston College wp2005-14, Center for Retirement Research, revised Dec 2005.
- Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
- Hans Fehr & Wenche Irén Sterkeby & Øystein Thøgersen, 2003.
"Social security reforms and early retirement,"
Journal of Population Economics,
Springer;European Society for Population Economics, vol. 16(2), pages 345-361, 05.
- Fehr, H. & Sterkeby, W.I. & Thogersen, O., 2000. "Social Security Reforms and Early Retirement," Papers 16/00, Norwegian School of Economics and Business Administration-.
- Fehr, Hans & Sterkeby, Wenche I. & Thøgersen, Øystein, 2000. "Social security reforms and early retirement," W.E.P. - Würzburg Economic Papers 24, University of Würzburg, Chair for Monetary Policy and International Economics.
- Enrique Fatas & Juan A. Lacomba & Francisco Lagos, 2007. "An Experimental Test On Retirement Decisions," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 602-614, 07.
- Enrica Carbone & John D. Hey, 2004. "The effect of unemployment on consumption: an experimental analysis," Economic Journal, Royal Economic Society, vol. 114(497), pages 660-683, 07.
- Barbara A. Butrica & Gordon B.T. Mermin, 2006. "Annuitized Wealth and Consumption at Older Ages," Working Papers, Center for Retirement Research at Boston College wp2006-26, Center for Retirement Research, revised Dec 2006.
- Robert S. Gazzale & Lina Walker, 2009. "Behavioral Biases in Annuity Choice: An Experiment," Department of Economics Working Papers 2009-01, Department of Economics, Williams College.
When requesting a correction, please mention this item's handle: RePEc:spr:series:v:4:y:2013:i:4:p:393-413. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.