Single Again? Saving Patterns When Widowhood Occurs

Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2015-04

32 Pages Posted: 28 Nov 2015

See all articles by Maria Cristina Rossi

Maria Cristina Rossi

University of Turin

Eva Sierminska

LISER; DIW Berlin - German Socio-Economic Panel Study (SOEP); IZA Institute of Labor Economics

Date Written: October 2015

Abstract

In this paper we examine the effect of widowhood on asset trajectories. In many industrialized countries, close to half of households are headed by women single, divorced, separated or widowed and therefore their ability to make financial decisions is crucial for their economic well-being as well as their dependents’. Meanwhile, research has found that women tend to be less involved with the stock market and have lower financial sophistication, leaving them out of an important way of accumulating resources via investing and saving. At the same time their higher risk aversion may have sheltered them from some of the effects of the financial crisis. For a two-adult household, the portfolio structure is likely to reflect preferences of the main financial decision maker (usually the husband). When widowhood occurs it could be that singles re-optimize their decisions according to their own preferences. We test this by examining whether there is a change in the wealth accumulation for households (over 60) that have experienced the shock of becoming widowed. Our results indicate there to be an initially statistically significant effect of widowhood on wealth -- differential for women and men. The effect disappears once we control for health insurance, but re-appears several years after the shock suggesting a differential willingness to save for women and men.

Keywords: wealth trajectories, household portfolios, windowhood, gender, bargaining

JEL Classification: D15, D91, J12, J14

Suggested Citation

Rossi, Maria Cristina and Sierminska, Eva, Single Again? Saving Patterns When Widowhood Occurs (October 2015). Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2015-04, Available at SSRN: https://ssrn.com/abstract=2695792 or http://dx.doi.org/10.2139/ssrn.2695792

Maria Cristina Rossi (Contact Author)

University of Turin ( email )

Via Po 53
Torino, Turin - Piedmont 10100
Italy

Eva Sierminska

LISER ( email )

3, avenue de la Fonte
Esch-sur-Alzette, L-4364
Luxembourg

HOME PAGE: http://www.sierminska.eu

DIW Berlin - German Socio-Economic Panel Study (SOEP)

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Berlin, 10117
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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