Forward Looking Behavior And Empirical Household Consumption Function

Arbeitspapier

Modern consumer theories are built upon the premise of the forward looking behavior of households. While most of the empirical studies at micro level are based on Euler equation, there have been few to estimate the household consumption function and test the implication of forward looking behavior directly. One of the main difficulties is that forward looking behavior involves such variables as human wealth and income uncertainty which are not directly observable. This paper exploits the rotating panel feature of Consumer Expenditure Survey to construct the proxies and test significance of them in the household consumption function. We fail to find evidence to support forward looking behavior over long horizon.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Bonn Econ Discussion Papers ; No. 7/2001

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Empirical Analysis ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Macroeconomics: Consumption; Saving; Wealth
• Subject: Consumption Function ; Uncertainty ; Human Wealth

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jang, Insong
• Event: Veröffentlichung
• (who): University of Bonn, Bonn Graduate School of Economics (BGSE)
• (where): Bonn
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/78397
• Last update: 10.03.2025, 11:43 AM CET