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The Consumption of Stockholders and Non-Stockholders

28 Pages Posted: 21 Apr 2011  

N. Gregory Mankiw

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Stephen P. Zeldes

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Date Written: July 1990

Abstract

Only one-fourth of U.S. families own stock. This paper examines whether the consumption of stockholders differs from the consumption of non-stockholders and whether these differences help explain the empirical failures of the consumption-based CAPM. Household panel data are used to construct time series on the consumption of each group. The results indicate that the consumption of stockholders is more volatile than that of non-stockholders and is more highly correlated with the excess return on the stock market. These differences help explain the size of the equity premium, although they do not fully resolve the equity premium puzzle.

Suggested Citation

Mankiw, N. Gregory and Zeldes, Stephen P., The Consumption of Stockholders and Non-Stockholders (July 1990). NBER Working Paper No. w3402. Available at SSRN: https://ssrn.com/abstract=1816008

N. Gregory Mankiw (Contact Author)

Harvard University - Department of Economics ( email )

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Stephen P. Zeldes

Columbia Business School - Finance and Economics ( email )

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