Retirement Date Effects on Saving Bahavior: The Case of Non-Separable Preferences
In this paper we demonstrate that the magnitude of the reaction of saving behavior to a change in the anticipated retirement date is largely determined by the degree to which utility is additively separable in consumption and leisure. We show that the relative decrease in saving in response to a later anticipated retirement date is larger when preferences are non-separable in consumption and leisure, and the cross-derivative of the utility function is negative, than when preferences are separable. In particular, based on our simulations, the short term decrease in aggregate pre-retirement saving in response to a later anticipated retirement date may be up to 61.5% in the non-separable case as against 31% in the separable case. In the long-term , the decrease in pre-retirement saving would be as much as 28.5% in the non-separable case, as against 16.5% in the separable case.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: Newlands on Main, F0301 3rd Floor Mariendahl House, cnr Campground and Main Rds, Claremont, 7700 Cape Town|
Phone: 021 671-3980
Fax: +27 21 671 3912
Web page: http://www.econrsa.org/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:rza:wpaper:323. 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: (Charles Tanton)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.