On the Evolution of the US Consumer Wealth Distribution

44 Pages Posted: 19 Jul 2010

See all articles by Thomas Hintermaier

Thomas Hintermaier

University of Bonn

Winfried Koeniger

University of St. Gallen; CESifo (Center for Economic Studies and Ifo Institute); Center for Financial Studies (CFS); IZA Institute of Labor Economics; Swiss Finance Institute

Date Written: June 2010

Abstract

We use all available waves of the Survey of Consumer Finances to document the evolution of the wealth distribution in the US since the 1980s. We then rely on the shape of this distribution to estimate a life-cycle incomplete markets model. We find that considering a wide range of net-worth percentiles delivers very precise estimates of the structural parameters, impatience and risk aversion. The estimated model predicts some of the observed changes of the net-worth distribution, in particular for young consumers between ages 26 and 35.

Keywords: incomplete markets, life cycle, simulated method of moments, wealth distribution

JEL Classification: D91, E21

Suggested Citation

Hintermaier, Thomas and Koeniger, Winfried, On the Evolution of the US Consumer Wealth Distribution (June 2010). CEPR Discussion Paper No. DP7850, Available at SSRN: https://ssrn.com/abstract=1640372

Thomas Hintermaier

University of Bonn ( email )

Regina-Pacis-Weg 3
Postfach 2220
Bonn, D-53012
Germany

Winfried Koeniger

University of St. Gallen ( email )

Swiss Institute for Empirical Economic Research
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St.Gallen, CH-9000
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Center for Financial Studies (CFS) ( email )

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Frankfurt am Main, 60323
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Schaumburg-Lippe Str. 7/9
D-53072 Bonn
Germany

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

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