The Composition Effect of Consumption around Retirement: Evidence from Singapore

18 Pages Posted: 1 Nov 2014  

Sumit Agarwal

Georgetown University - Department of Finance

Jessica Pan

National University of Singapore (NUS)

Wenlan Qian

National University of Singapore - NUS Business School

Date Written: November 1, 2014

Abstract

It is well established that consumption is “hump” shaped over an individual’s lifecycle, peaking in middle age and then declining in the years that follow. Prior research has documented that consumption declines at retirement, which is inconsistent with the standard lifecycle model with consumption smoothing. Using a unique dataset with detailed administrative records of credit and debit card transactions, we show the hump shaped lifecycle consumption pattern as documented in the literature. Additionally, we show compositional changes in consumption expenditures across individuals in the years surrounding retirement confirming the results of Aguiar and Hurst (2005, 2013).

Keywords: Life Cycle, Aging, Pension Savings, Consumption, Spending, Debt, Credit Cards, Household Finance, Banks, Loans, Durable Goods, Discretionary Spending, Liquidity Constraints, Credit Constraints

JEL Classification: D12, D14, D91, E21, E51, E62, G21, H31, J26

Suggested Citation

Agarwal, Sumit and Pan, Jessica and Qian, Wenlan, The Composition Effect of Consumption around Retirement: Evidence from Singapore (November 1, 2014). Available at SSRN: https://ssrn.com/abstract=2517939 or http://dx.doi.org/10.2139/ssrn.2517939

Sumit Agarwal

Georgetown University - Department of Finance ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-8207 (Phone)

HOME PAGE: http://www.ushakrisna.com

Jessica Pan

National University of Singapore (NUS) ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

Wenlan Qian (Contact Author)

National University of Singapore - NUS Business School ( email )

15 Kent Ridge Drive
Singapore 117592, 119245
Singapore
(65) 65163015 (Phone)

HOME PAGE: http://sites.google.com/site/wenlanqian/

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