The Life-Cycle Hypothesis Revisited: Evidence on Housing Consumption after Retirement

Arbeitspapier

According to the life-cycle theory of consumption and saving, foreseeable retirement events should not reduce consumption. Whereas some consumption expenditures may fall when they are self-produced (given higher leisure after retirement), this argument applies especially to housing consumption which can hardly be substituted by home production. We test this hypothesis using micro data for Germany (GSOEP) and find that income reductions when entering retirement have a negative effect on housing expenditures for tenants. For some econometric specifications, this effect is significantly stronger than the one of income changes at other times. While this result suggests that the strict consumption-smoothing hypothesis is violated for the subgroup of nonhome owners, the effect is quantitatively small, which explains the ambiguity of previous findings.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IMK Working Paper ; No. 14/2010

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
• Subject: consumption smoothing ; retirement-consumption puzzle ; GSOEP ; Einkommenshypothese ; Rentner ; Alte Menschen ; Verbraucherausgaben ; Wohnkosten ; Miete ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Beblo, Miriam ; Schreiber, Sven
• Event: Veröffentlichung
• (who): Hans-Böckler-Stiftung, Institut für Makroökonomie und Konjunkturforschung (IMK)
• (where): Düsseldorf
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/105934
• URN: urn:nbn:de:101:1-201101312943
• Last update: 10.03.2025, 11:42 AM CET