Consumption and Children
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.
|Date of creation:||Aug 2002|
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