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Children and Household Utility: Evidence from Kids Flying the Coop

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  • Norma B. Coe
  • Anthony Webb

Abstract

Using consumption and wealth data from the Health and Retirement Study (HRS), this paper explores the impact of children leaving home on household consumption. We find that households maintain their household-level consumption, despite the fact that the number of individuals in the household has decreased, increasing per-capita consumption. Further, we find no evidence of increases in total net wealth, or any of its components, after children leave the household. These findings suggest that households do not dramatically change their savings or consumption patterns when their children fly the coop. Those households who are already behind in their retirement preparations will remain at risk of entering retirement with insufficient wealth to maintain their pre-retirement standard of living.

Suggested Citation

  • Norma B. Coe & Anthony Webb, 2010. "Children and Household Utility: Evidence from Kids Flying the Coop," Working Papers, Center for Retirement Research at Boston College wp2010-15, Center for Retirement Research, revised Nov 2010.
    • Handle: RePEc:crr:crrwps:wp2010-15
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    File URL: http://crr.bc.edu/working-papers/children-and-household-utility-evidence-from-kids-flying-the-coop-ii/
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    Cited by:

    1. Klos, Alexander & Rottke, Simon, 2013. "Saving and Consumption When Children Move Out," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79786, Verein für Socialpolitik / German Economic Association.
    2. Simon Rottke & Alexander Klos, 2016. "Savings and Consumption When Children Move Out," Review of Finance, European Finance Association, vol. 20(6), pages 2349-2377.
    3. Congressional Budget Office, 2017. "Measuring the Adequacy of Retirement Income: A Primer," Reports 53191, Congressional Budget Office.

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