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Insatiable Wealth Preference: Evidence from Japanese Household Survey

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  • Mika Akesaka
  • Ryo Mikami
  • Yoshiyasu Ono

Abstract

This study theoretically considers household behavior with wealth preference and empirically investigates the validity of insatiable wealth preference using a nationally representative survey. With wealth preference, the marginal rate of substitution of asset holdings for consumption depends on the nominal interest rates of assets at each point in time. From this property, we derive a reduced-form model and estimate it to find that the marginal utility of holding financial assets remains strictly positive as asset holdings increase and has a strictly positive lower bound; that is the insatiability of wealth preference. We also show that this property plays a crucial role in creating secular demand stagnation and expanding asset price bubbles.

Suggested Citation

  • Mika Akesaka & Ryo Mikami & Yoshiyasu Ono, 2024. "Insatiable Wealth Preference: Evidence from Japanese Household Survey," ISER Discussion Paper 1241rr, Institute of Social and Economic Research, Osaka University, revised Oct 2024.
    • Handle: RePEc:dpr:wpaper:1241rr
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy

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