The life cycle theory predicts the smoothing of consumption over time by forward-looking agents with concave utility functions. However, many empirical studies have shown a significant drop in expenditures after retirement in US, Italy, Germany, UK, Spain and other countries. This contradicts...

This paper is a rejoinder to Kliman's (2008-9) reply to a paper published in the >i>Journal of Post Keynesian Economics>/i> by Díaz and Osuna (2005-6). We show that Kliman's reasoning about spurious correlation rests on the popular confusion between correlation and causation.