Dynamic Spending Responses to Wealth Shocks: Evidence from Quasi-lotteries on the Stock Market
Publikation: Working paper › Forskning
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Dynamic Spending Responses to Wealth Shocks: Evidence from Quasi-lotteries on the Stock Market. / Andersen, Asger Lau; Johannesen, Niels; Sheridan, Adam.
2021.Publikation: Working paper › Forskning
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TY - UNPB
T1 - Dynamic Spending Responses to Wealth Shocks: Evidence from Quasi-lotteries on the Stock Market
AU - Andersen, Asger Lau
AU - Johannesen, Niels
AU - Sheridan, Adam
PY - 2021
Y1 - 2021
N2 - How much and over what horizon do households adjust their consumption in response to stock market wealth shocks? We address these questions using granular data on spending and stock portfolios from a large bank and exploiting lottery-like variation in gains across investors with similar portfolio characteristics. Consistent with the permanent income hypothesis, spending responses to stock market gains are immediate and persistent. The responses cumulate to a marginal propensity to consume of around 4% over a one-year horizon. The estimates differ substantially by household liquidity, but not by financial attention, as measured by the frequency of account logins.
AB - How much and over what horizon do households adjust their consumption in response to stock market wealth shocks? We address these questions using granular data on spending and stock portfolios from a large bank and exploiting lottery-like variation in gains across investors with similar portfolio characteristics. Consistent with the permanent income hypothesis, spending responses to stock market gains are immediate and persistent. The responses cumulate to a marginal propensity to consume of around 4% over a one-year horizon. The estimates differ substantially by household liquidity, but not by financial attention, as measured by the frequency of account logins.
M3 - Working paper
T3 - CEBI Working Paper Series
BT - Dynamic Spending Responses to Wealth Shocks: Evidence from Quasi-lotteries on the Stock Market
ER -
ID: 288342154