Consumption-wealth comovement of the wrong sign
By: James J. Choi ... [et al.].
Contributors: Choi, James J.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10454; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10454.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: 401(k) plans.; Consumption (Economics)
Description: "Economic theory predicts that an unexpected wealth windfall should increase consumption shortly after the windfall is received.  We test this prediction using administrative records on over 40,000 401(k) accounts.  Contrary to theory, we estimate a negative short-run marginal propensity to consume out of idiosyncratic 401(k) capital gains shocks.  These results cannot be interpreted as standard intertemporal substitution, since the idiosyncratic returns that we study do not predict future returns.  Instead, our findings imply that many investors are influenced by a positive feedback effect, through which higher recent returns encourage higher short-run saving.  Like any other animal, 401(k) participants appear to increase behaviors that have been associated with high rewards in the past"--National Bureau of Economic Research web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 1/12/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.