This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. September 2001
  5. What Accounts for the Variation in Retirement Wealth among U.S. Households?

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

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

  • B. Douglas Bernheim
  • Jonathan Skinner
  • Steven Weinberg
American Economic Review
vol. 91, no. 4, September 2001
(pp. 832–857)
Download Full Text PDF

Abstract

Even among households with similar socioeconomic characteristics, saving and wealth vary considerably. Life-cycle models attribute this variation to differences in time preference rates, risk tolerance, exposure to uncertainty, relative tastes for work and leisure at advanced ages, and income replacement rates. These factors have testable implications concerning the relation between accumulated wealth and the shape of the consumption profile. Using the Panel Study of Income Dynamics and the Consumer Expenditure Survey, we find little support for these implications. The data are instead consistent with "rule of thumb," "mental accounting," or hyperbolic discounting theories of wealth accumulation.

Citation

Bernheim, B., Douglas, Jonathan Skinner, and Steven Weinberg. 2001. "What Accounts for the Variation in Retirement Wealth among U.S. Households?" American Economic Review, 91 (4): 832–857. DOI: 10.1257/aer.91.4.832

JEL Classification

  • D21 Firm Behavior
  • J26 Retirement; Retirement Policies
  • D12 Consumer Economics: Empirical Analysis