Human Capital, Asset Allocation, and Life Insurance

Chen, Peng; Ibbotson, Roger G.; Milevsky, Moshe A.; Zhu, Kevin

doi:10.2469/faj.v62.n1.4061

Cited by 66 publications

(17 citation statements)

References 22 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…We assume that the family can invest their financial wealth in a broadly diversified index fund that is expected to earn an inflation-adjusted arithmetic mean of l m ¼ 7% per annum, with a volatility of r m ¼ 20%. These number are consistent with other asset allocation research in the literature, see for example Campbell and Viciera (2002) or Chen et al (2006). The risk free rate of r ¼ 2% after inflation is also consistent with current conditions in the (inflation-adjusted) bond market.…”

Section: Numerical Results and Discussionsupporting

confidence: 80%

“…By this HARA specification we effectively impose the axiomatic condition that instantaneous consumption rate must be above a lower bound while the breadwinner is alive and after his or her death. This paper is an extension of Huang et al (2006) and is closely related to Pliska and Ye (2007); Ye (2007) and Bodie et al (2004) as well as Chen et al (2006), all of which develop a limited model of insurance demand and/or retirement income planning under more restrictive conditions. See Zietz (2003) for a more comprehensive review of the literature on life insurance.…”

Section: Introductionmentioning

confidence: 98%

See 1 more Smart Citation

Portfolio choice and mortality-contingent claims: The general HARA case

Huang

Milevsky

2008

Journal of Banking & Finance

Self Cite

View full text Add to dashboard Cite

Section: Numerical Results and Discussionsupporting

confidence: 80%

Section: Introductionmentioning

confidence: 98%

Portfolio choice and mortality-contingent claims: The general HARA case

Huang

Milevsky

2008

Journal of Banking & Finance

Self Cite

View full text Add to dashboard Cite

“…An increased life expectancy, however, extends this time horizon (Love et al 2008). In addition, some financial economists suggest that households with more than enough financial assets for short-term needs should hold some stock investments, though it is reasonable to decrease the portfolio proportion devoted to stock assets as a person ages (Chen et al 2006).…”

mentioning

confidence: 99%

Who Among the Elderly Owns Stocks? The Role of Cognitive Ability and Bequest Motive

Kim¹,

Hanna

Chatterjee

et al. 2012

J Fam Econ Iss

View full text Add to dashboard Cite

Conventional advice is to reduce risky investments as one ages. Such a generalized focus on risk avoidance may be inappropriate for elderly with longer life spans and those with financial goals that extend beyond their lifetime. To better understand risky asset holdings among the elderly, we investigated the effect of cognitive ability and bequest motive on stock ownership and stock purchase. Using the 2004 wave of the Health and Retirement Study, we found that one-third of elderly households held stocks and 36% of those elderly stockowners had recently acquired stocks. The respondent's cognitive ability and bequest motive were strongly related to stock ownership. Among those who owned stock, a bequest motive was positively related to a recent purchase of stocks.

show abstract

“…In all cases, however, the asset allocation remains rather unaffected by changing the age of the investor. Bodie et al (1992) and Chen et al (2006) find a significant impact of human capital on asset allocation decisions over the life cycle. We therefore also investigate the importance of labor income on the age dependence of asset allocation decisions.…”

Section: Numerical Resultsmentioning

confidence: 98%