The Retirement-Consumption Puzzle: Actual Spending Change in Panel Data
The simple one-good model of life-cycle consumption requires that consumption be continuous over retirement; yet prior research based on partial measures of consumption or on synthetic panels indicates that spending drops at retirement, a result that has been called the retirement-consumption puzzle. Using panel data on total spending, nondurable spending and food spending, the authors find that spending declines at small rates over retirement, at rates that could be explained by mechanisms such as the cessation of work-related expenses, unexpected retirement due to a health shock or by the substitution of time for spending. In the low-wealth population where spending did decline at higher rates, the main explanation for the decline appears to be a high rate of early retirement due to poor health. They conclude that at the population level there is no retirement-consumption puzzle in their data, and that in subpopulations where there were substantial declines, conventional economic theory can provide the main explanation.
|Date of creation:||Apr 2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.rand.org/pubs/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Agar Brugiavini & Erich Battistin, & Enrico Rettore & Guglielmo Weber, 2007.
"The Retirement Consumption Puzzle: Evidence from a Regression Discontinuity Approach,"
2007_27, Department of Economics, University of Venice "Ca' Foscari".
- Erich Battistin & Agar Brugiavini & Enrico Rettore & Guglielmo Weber, 2009. "The Retirement Consumption Puzzle: Evidence from a Regression Discontinuity Approach," American Economic Review, American Economic Association, vol. 99(5), pages 2209-26, December.
- Erich Battistin & Agar Brugiavini & Enrico Rettore & Guglielmo Weber, 2008. "The retirement consumption puzzle: evidence from a regression discontinuity approach," IFS Working Papers W08/05, Institute for Fiscal Studies.
- Banks, James & Blundell, Richard & Tanner, Sarah, 1998.
"Is There a Retirement-Savings Puzzle?,"
American Economic Review,
American Economic Association, vol. 88(4), pages 769-88, September.
When requesting a correction, please mention this item's handle: RePEc:ran:wpaper:563. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Benson Wong)
If references are entirely missing, you can add them using this form.