Deconstructing life cycle expenditure

Mark Aguiar, Erik Hurst

Research output: Contribution to journalArticle

58 Scopus citations

Abstract

We revisit two well-known facts regarding life cycle expenditures: the "hump"-shaped profile of nondurable expenditures and the increase in cross-household consumption inequality. We document that the behavioroftotal nondurables masks surprising heterogeneityinthe life cycle profile of individual consumption subcomponents. We provide evidence that the categories driving life cycle consumption either are inputs into market work or are amenable to home production. Using a quantitative model, we document that the disaggregated life cycle consumption profiles imply a level of uninsurable permanent income risk that issubstantially lower than that impliedby amodel usingacomposite consumption good.

Original languageEnglish (US)
Pages (from-to)437-492
Number of pages56
JournalJournal of Political Economy
Volume121
Issue number3
DOIs
StatePublished - Jun 2013

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Deconstructing life cycle expenditure'. Together they form a unique fingerprint.

  • Cite this