Saving rates and portfolio choice with subsistence consumption

Arbeitspapier

We analytically show that a common across rich/poor individuals Stone-Geary utility function with subsistence consumption in the context of a simple two-asset portfolio-choice model is capable of qualitatively and quantitatively explaining: (i) the higher saving rates of the rich, (ii) the higher fraction of personal wealth held in risky assets by the rich, and (iii) the higher volatility of consumption of the wealthier. On the contrary, time-variant 'keeping-up-with-the-Joneses' weighted average consumption which plays the role of moving benchmark subsistence consumption gives the same portfolio composition and saving rates across the rich and the poor, failing to reconcile the model with what micro data say.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: CFS Working Paper ; No. 2011/06

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Portfolio Choice; Investment Decisions ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Macroeconomics: Consumption; Saving; Wealth ; Criteria for Decision-Making under Risk and Uncertainty ; Household Saving; Personal Finance ; Consumer Economics: Theory
• Thema: Elasticity of Intertemporal Substitution ; Stone-Geary Preferences ; Two-asset Portfolio ; Household Portfolios ; Wealth Inequality ; Controlled Diffusion ; Anlageverhalten ; Portfolio-Management ; Konsuminterdependenz ; Vermögensverteilung ; Existenzminimum ; Konsumentenverhalten ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Achury, Carolina ; Hubar, Sylwia ; Koulovatianos, Christos
• Ereignis: Veröffentlichung
• (wer): Goethe University Frankfurt, Center for Financial Studies (CFS)
• (wo): Frankfurt a. M.
• (wann): 2011

Weitere Informationen

• Handle: http://hdl.handle.net/10419/57372
• URN: urn:nbn:de:hebis:30-92944
• Letzte Aktualisierung: 10.03.2025, 11:41 MEZ