The Wealthy Hand-to-Mouth

Kaplan, Greg; Violante, Giovanni L.; Weidner, Justin

doi:10.1353/eca.2014.0002

Cited by 409 publications

(314 citation statements)

References 49 publications

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“…to the value obtained by Coenen andStraub (2005, 2013) and is consistent with the values reported in Kaplan et al (2014). Using survey data on household portfolios for Germany, France, Italy, and Spain between 2008 and 2010, Kaplan et al (2014) obtain a share of hand-to-mouth consumers between 20 and 32 percent, according to the country. 10 The rest of the parameters are reported in Section E of the online appendix.…”

Section: Prior Predictive Analysissupporting

confidence: 88%

In Search of the Transmission Mechanism of Fiscal Policy in the Euro Area

Fève

Sahuc

2016

J of Applied Econometrics

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This paper applies the DSGE-VAR methodology to assess the size of fiscal multipliers in the data and the relative contributions of two transmission mechanisms of government spending shocks, namely hand-to-mouth consumers and Edgeworth complementarity. Econometric experiments show that a DSGE model with Edgeworth complementarity is a better representation of the transmission mechanism of fiscal policy as it yields dynamic responses close to those obtained with the flexible DSGE-VAR model (i.e. an impact output multiplier larger than one and a crowding-in of private consumption). The estimated share of hand-to-mouth consumers is too small to replicate the positive response of private consumption.

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Section: Prior Predictive Analysissupporting

confidence: 88%

In Search of the Transmission Mechanism of Fiscal Policy in the Euro Area

Fève

Sahuc

2016

J of Applied Econometrics

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“…87 Even relatively wealthy households can face short-run liquidity concerns if they hold a large share of their wealth in illiquid assets. See Kaplan, Violante, and Weidner (2014) for evidence on the prevalence of such "wealthy hand-tomouth" households.…”

Section: Assumptions About Mental Accountingmentioning

confidence: 99%

Estimating Risk Preferences in the Field

Barseghyan

Molinari

O’Donoghue

et al. 2018

Journal of Economic Literature

123

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We survey the literature on estimating risk preferences using field data. We concentrate our attention on studies in which risk preferences are the focal object and estimating their structure is the core enterprise. We review a number of models of risk preferences—including both expected utility (EU) theory and non-EU models—that have been estimated using field data, and we highlight issues related to identification and estimation of such models using field data. We then survey the literature, giving separate treatment to research that uses individual-level data (e.g., property-insurance data) and research that uses aggregate data (e.g., betting-market data). We conclude by discussing directions for future research. ( JEL C51, D11, D81, D82, D83, G22, I13)

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“…Another theoretical exception to the idea that fluctuations are driven only by (observably) credit-constrained families overreacting comes out of two-good models with high transaction costs on one of the goods. Chetty and Szeidl (2007) provide the theoretical basis for "wealthy hand-to-mouth" behavior, and and Kaplan, Violante, and Weidner (2014) provide empirical support for the proposition that families with (observably) high wealth will also change spending quite dramatically when transitory income shocks occur. These various inequality narratives share some general predictions about the distribution of income, borrowing, and spending over the past two decades, even though the specific mechanisms underlying the stories are different.…”

Section: The Link Between Inequality and Macroeconomic Fluctuationsmentioning

confidence: 82%

Heterogeneity in Economic Shocks and Household Spending

Devlin-Foltz

Sabelhaus

2015

FEDS

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Large swings in aggregate household-sector spending, especially for big ticket items such as cars and housing, have been a dominant feature of the macroeconomic landscape in the past two decades. Income and wealth inequality increased over the same period, leading some to suggest the two phenomena are interconnected. Indeed, there is supporting evidence for the idea that heterogeneity in economic shocks and spending are connected, most notably in studies using local-area geography as the unit of analysis. The Survey of Consumer Finances (SCF) provides a household-level perspective on changes in wealth, income, and spending across different types of families. The SCF confirms that inequality is indeed increasing in recent decades, and the data provide support for the proposition that shocks to income and wealth are indeed related to large swings in spending across and within birth cohorts. However, the economic shocks associated with the Great Recession and changes in spending and debt to income ratios are widespread, and inconsistent with a narrow focus on the experiences and changes in behavior of particular (especially low- and modest-income) households.

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The Wealthy Hand-to-Mouth

Cited by 409 publications

References 49 publications

In Search of the Transmission Mechanism of Fiscal Policy in the Euro Area

In Search of the Transmission Mechanism of Fiscal Policy in the Euro Area

Estimating Risk Preferences in the Field

Heterogeneity in Economic Shocks and Household Spending

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