What Accounts for the Variation in Retirement Wealth Among U.S. Households?

73 Pages Posted: 10 Jun 2000 Last revised: 9 Jul 2022

See all articles by B. Douglas Bernheim

B. Douglas Bernheim

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

Jonathan S. Skinner

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Steven Aric Weinberg

Government of the United States of America - Financial Markets Section

Multiple version iconThere are 2 versions of this paper

Date Written: October 1997

Abstract

Household survey data consistently depict large variations in saving and wealth among households with similar socio-economic characteristics. Within the context of the life" cycle hypothesis, families with identical lifetime resources might choose to accumulate" different levels of wealth for a variety of reasons, including variation in time preference rates risk tolerance, exposure to uncertainty, relative tastes for work and leisure at advanced ages income replacement rates, and so forth. These factors can be divided into a small number of" classes, each with a distinctive implication concerning the relation between accumulated wealth" and the shape of the consumption profile. By examining this relation empirically for the presence or absence of these particular explanations for differences in wealth. Using" the Panel Study of Income Dynamics and the Consumer Expenditure Survey little support for life cycle models that rely on the above factors to explain wealth variation. " The data are, however, consistent with rule of thumb' or mental accounting' theories of" wealth accumulation.

Suggested Citation

Bernheim, B. Douglas and Skinner, Jonathan S. and Weinberg, Steven Aric, What Accounts for the Variation in Retirement Wealth Among U.S. Households? (October 1997). NBER Working Paper No. w6227, Available at SSRN: https://ssrn.com/abstract=225985

B. Douglas Bernheim (Contact Author)

Stanford University - Department of Economics ( email )

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Jonathan S. Skinner

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Steven Aric Weinberg

Government of the United States of America - Financial Markets Section ( email )

United States

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