Testing consumers' asymmetric reaction to wealth changes

This study contains several tests to show that individuals overreact to negative wealth changes, relative to positive wealth changes. This asymmetry, that is found using micro data, suggests that economists should not treat symmetrically the relation between economic variables (consumption for instance) and wealth in their models when wealth decreases. We find that this asymmetry increases with age and picks at retirement.

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Year of publication:	2006-01
Authors:	Mastrogiacomo, Mauro
Institutions:	Centraal Planbureau (CPB), Government of the Netherlands

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Extent:	application/pdf
Series:	CPB Discussion Paper.
Type of publication:	Book / Working Paper
Language:	English
Classification:	D01 - Microeconomic Behavior: Underlying Principles ; D10 - Household Behavior and Family Economics. General ; D84 - Expectations; Speculations ; J14 - Economics of the Elderly
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005572676