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Consumption and Children

Author

Listed:
  • Martin Browning

    (Institute of Economics, University of Copenhagen)

  • Mette Ejrnæs

    (Institute of Economics, University of Copenhagen)

Abstract

Several recent papers have concluded that precautionary saving motives are needed to reconcile data on lifetime patterns of consumption and income with a standard optimising model. In this paper we contest that we necessarily need a precautionary motive and we show that if we take consumption to take proper account of the number and ages of children, then adjusted consumption does not track income. We do not infer from this that children are the sole cause of the rise in consumption in the early part of life but simply that the data we have are not informative enough to convincingly identify the cause of the rise.

Suggested Citation

  • Martin Browning & Mette Ejrnæs, 2002. "Consumption and Children," CAM Working Papers 2002-06, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    • Handle: RePEc:kud:kuieca:2002_06
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    File URL: http://www.econ.ku.dk/cam/wp0910/wp0203/2002-06.pdf/
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    Keywords

    consumption; children; precautionary motive; life-cycle;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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