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The impact of wealth on consumption and retirement behaviour in the UK

Listed author(s):
  • David Blake

Housing and pension wealth are shown to be important determinants of personal sector consumption and retirement behaviour in the UK. Housing and state pension wealth have a positive effect on consumption, while private pension wealth promotes greater savings. Greater private defined benefit pension wealth encourages earlier retirement, while greater de¯ned contribution pension wealth has the e®ect of delaying retirement. State pension wealth appears to have no effect on the retirement decision. Other variables relating to income, labour market and demographic status and spillovers from other sectors are also shown to be important. The consumption equation forecasts the late 1980s boom and the early 1990s slump in the UK better than other models that disregard housing and pension wealth. A particularly important cause of the boom was the huge private pension fund surpluses that accrued as a result of the stock market boom of the 1980s.

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File URL: http://eprints.lse.ac.uk/24949/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 24949.

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Length: 47 pages
Date of creation: Oct 2002
Handle: RePEc:ehl:lserod:24949
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