Working Paper: NBER ID: w15756
Authors: Orazio P. Attanasio; Guglielmo Weber
Abstract: This paper provides a critical survey of the large literature on the life cycle model of consumption, both from an empirical and a theoretical point of view. It discusses several approaches that have been taken in the literature to bring the model to the data, their empirical successes and failures. Finally, the paper reviews a number of changes to the standard life cycle model that could help solve the remaining empirical puzzles.
Keywords: Consumption; Saving; Life Cycle Model; Public Policy
JEL Codes: D11; D12; E21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| life cycle model (O41) | consumption behavior (D10) |
| income (E25) | consumption behavior (D10) |
| income (E25) | saving rates (E43) |
| lower permanent income (D15) | higher saving rates among lower-income groups (D14) |
| retirement (J26) | consumption drop (E20) |