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Intergenerational Linkages in Consumption Behavior

  • Donald Cox

    ()

    (Boston College)

  • Serena Ng

    ()

    (Boston College)

  • Andreas Waldkirch

    ()

    (Boston College)

Consumption is partly a social activity, yet most studies of consumer behavior treat households in isolation. We investigate familial relationships in consumption patterns using a sample of parents and their children from the Panel Study of Income Dynamics. We find a positive and statistically significant parent-specific effect on childrenÃs consumption even after controlling for the effect of parental income, and we find similar effects for sibling pairs. Child consumption responds negatively to large post-retirement shortfalls in consumption of the parents. This behavior holds up even after allowing for the possibility of smaller parent-to-child transfers made necessary by the parental consumption shortfalls. These results suggest that although income is an important source of the intergenerational correlation, parental choices and experiences also affect consumption behavior of the children.

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Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 482.

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Length: 32 pages
Date of creation: 08 Nov 2000
Date of revision:
Handle: RePEc:boc:bocoec:482
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