Understanding the heterogeneity of savings and asset allocation: A behavioral-economics perspective
Binswanger,J.
Binswanger,J.
Abstract
Why do saving rates and the proportion of savings invested in stocks substantially increase with income? This paper sheds light on this question from the perspective of a new bounded-rationality life cycle model. It has been shown elsewhere that this model is better than existing ones at predicting how savings and asset allocation choices vary over the life cycle. In this paper it is shown that a very simple version of the same model also allows for a better understanding of the variation in savings and asset allocation choices across income groups.
Description
Appeared previously as CentER DP 2008-13 (rt)
Date
2010
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Research Projects
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Citation
Binswanger, J 2010, 'Understanding the heterogeneity of savings and asset allocation : A behavioral-economics perspective', Journal of Economic Behavior and Organization, vol. 76, no. 2, pp. 296-317.