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The Effects of the Financial Crisis on Actual and Anticipated Consumption

  • Michael D. Hurd


  • Susann Rohwedder


We studied how households adjust their spending in response to the financial crisis. Based on five waves of data from the Consumption and Activities Mail Survey, we quantified the reduction in total consumption and in specific categories of consumption in the older population at large and by stock ownership, both as a proxy for wealth and to test assumptions about whether stock ownership was associated with different responses. In particular, we compared consumption changes between 2007 and 2009 with consumption changes over prior years. We used panel data on anticipated changes in spending at retirement to quantify the effects of the financial crisis on well-being in retirement via a difference-in-differences approach.

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Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp255.

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Length: 29 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:mrr:papers:wp255
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  1. Gruber, Jonathan, 1997. "The Consumption Smoothing Benefits of Unemployment Insurance," American Economic Review, American Economic Association, vol. 87(1), pages 192-205, March.
  2. Martin Browning & Thomas F. Crossley, 2009. "Shocks, Stocks, and Socks: Smoothing Consumption Over a Temporary Income Loss," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1169-1192, December.
  3. Michael Hurd & Susann Rohwedder, 2009. "Methodological Innovations in Collecting Spending Data: The HRS Consumption and Activities Mail Survey," Fiscal Studies, Institute for Fiscal Studies, vol. 30(Special I), pages 435-459, December.
  4. Martin Browning & Thomas Crossley, 2003. "Shocks, Stocks and Socks," Department of Economics Working Papers 2003-07, McMaster University.
  5. Melvin Stephens, 2004. "Job Loss Expectations, Realizations, and Household Consumption Behavior," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 253-269, February.
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