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Insatiable Wealth Preference: Evidence from Japanese Household Survey

Author

Listed:
  • Mika Akesaka

    (Research Institute of Economics and Business Administration, Kobe University, JAPAN)

  • Ryo Mikami

    (Faculty of Economics and Law, Shinshu University, JAPAN)

  • Yoshiyasu Ono

    (Institute of Social and Economic Research, Osaka University and Faculty of Economics, Osaka University of Economics, JAPAN)

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. We focus on this property and find that the marginal utility of holding financial assets remains strictly positive as asset holdings increase and has a strictly positive lower bound, implying the insatiability of wealth preference. 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," Discussion Paper Series DP2024-16, Research Institute for Economics & Business Administration, Kobe University, revised Oct 2024.
    • Handle: RePEc:kob:dpaper:dp2024-16
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    References listed on IDEAS

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    More about this item

    Keywords

    Wealth preference; Survey data; Secular stagnation; Bubbles;
    All these keywords.

    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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