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.

Income incentives to labour participation and home production; the contribution of the tax credits in the Netherlands

We set up a reduced form model of labour-market participation for young women who have to balance their career with motherhood. The model accounts for the occurrence of future uncertain events, like child birth and early retirement, and includes time spent in home production; however it does not require the estimation of a dynamic programming model. We claim that the careful implementation of institutions can return optimal life patterns of participation without the need of a structural approach. The weaker theoretical framework is more than compensated by the rich spectrum in policy simulations that may be performed. As illustrations, we simulate the effect of two policy options regarding tax credits on the hazard rate out of work.

Did you really save so little for your retirement? An analysis of retirement savings and unconventional retirement accounts

We use a confirmatory factor analysis to study the relation between the importance of a broad spectrum of saving motives, such as saving for retirement, and saving behavior. Survey data show that many respondents save for retirement in unconventional retirement accounts, such as investments in real estate. We show that finding the retirement motive important does not directly translate in additional retirement savings. We show that the annuity stream generated by conventional and unconventional accounts from age 65 onwards is small and that most savings are residual and are not being put aside for a specific motive. Also self-employed retirement savings are low, even though this group has generally no occupational pension.

The Precautionary Saving Motive and Wealth Accumulation

We quantify the relative importance of the precautionary saving motive in determining wealth accumulation. Puzzling results have appeared on the relative importance of the precautionary motive when this is derived either using a self reported measure of uncertainty about future income rather than observed life-cycle income variation. In this study we show that if one takes into account explicitly the uncertainty of the second income earner results converge using both methods. Precautionary savings account for about 30% of wealth accumulation. However we also claim that obtaining converging results does not necessarily answer the question on the empirical relevance of precautionary savings, as the amounts being saved largely differ among studies due to the country specific incentives to save and to the measure of wealth accumulation.

Small noise asymptotic expansions for stochastic PDE's driven by dissipative nonlinearity and L\'evy noise

We study a reaction-diffusion evolution equation perturbed by a space-time L\'evy noise. The associated Kolmogorov operator is the sum of the infinitesimal generator of a $C_0$-semigroup of strictly negative type acting in a Hilbert space and a nonlinear term which has at most polynomial growth, is non necessarily Lipschitz and is such that the whole system is dissipative. The corresponding It\^o stochastic equation describes a process on a Hilbert space with dissi- pative nonlinear, non globally Lipschitz drift and a L\'evy noise. Under smoothness assumptions on the non-linearity, asymptotics to all orders in a small parameter in front of the noise are given, with detailed estimates on the remainders. Applications to nonlinear SPDEs with a linear term in the drift given by a Laplacian in a bounded domain are included. As a particular case we provide the small noise asymptotic expansions for the SPDE equations of FitzHugh Nagumo type in neurobiology with external impulsive noise.Comment: 29 page

Households' response to wealth changes; do gains or losses make a difference

We estimate the excess impact of financial asset capital losses relative to gains on household active savings and durable goods consumption in the Netherlands. The sample period covers both the stock-market boom during the 90's, and the bear period afterwards. The results suggest that households react more to capital losses than to capital gains. Failing to take into account this asymmetry may seriously bias the estimates of the marginal propensity to consume out of wealth.

Private Wealth and Planned Early Retirement: A Panel Data Analysis for the Netherlands, 1994-2009

We study the causal relation between private wealth and retirement age. We propose two estimation strategies based on expected retirement age. The outcome variable is observed repeatedly over time. We correct first for the unobserved heterogeneity in the disutility of work by using panel data techniques. Next, we exploit information on expected wealth accumulation in order to identify the unexpected component in wealth accumulation. In line with the literature we find a small but significant effect of private wealth on planned early retirement.early retirement, private wealth, subjective retirement expectations