Efforts to reconcile inconsistencies between theory and estimates of the income elasticity of the value of a … how exogenous income shocks, such as unexpected medical expenditures, may affect labor supply decisions which in turn … influence both the coefficient of relative risk aversion and the IEVSL. The presence of a consumption commitment, such as a home …

This paper develops a method of estimating the coefficient of relative risk aversion (g) from data on labor supply. The … ratio of the income elasticity of labor supply to the wage elasticity, holding fixed the degree of complementarity between … stochastic. Using a large set of existing estimates of wage and income elasticities, I find a mean estimate of g = 1. I also give …

utility model. I derive a formula for the coefficient of relative risk aversion (g) in terms of (1) the ratio of the income …This paper shows that existing evidence on labor supply behavior places an upper bound on risk aversion in the expected …

household's attitudes toward risk, as shown in Swanson (2012). In this paper, I analyze how frictional labor markets affect that … analysis. Household risk aversion (as measured by willingness to pay to avoid a wealth shock) is higher: 1) in countries with … in Europe are large enough to play a substantial contributing role to risk aversion in those countries. Nevertheless …

frictions that allows us to distinguish between different sources of risk and to estimate their effects. The sources of risk are … heterogeneity. In contrast to simpler models that attribute all income fluctuations to shocks, our framework disentangles … variability due to shocks from variability due to the responses to these shocks. Estimates of productivity risk, once we control …

This paper examines how aversion to risk and aversion to intertemporal substitution determine the strength of the … strength of the precautionary saving motive which generalizes the concept of "prudence" introduced by Kimball (1990b). For … large risks, we show that decreasing absolute risk aversion guarantees that the precautionary saving motive is stronger than …

This paper argues that precautionary savings against uncertain income comprise a large fraction of aggregate savings. A … second-order Taylor-Series approximation of the Euler equations. Using empirical measures of income uncertainty, I find that …, although this finding may in part reflect unobservable differences in risk aversion among occupations …

Studies of risk preference have empirically established two regularities that are inconsistent with the canonical … expected utility model: (1) risk aversion over small gambles greatly exceeds risk aversion over larger stakes and (2) insurance … buyers play the lottery. This paper characterizes risk preferences both theoretically and empirically in a world with two …

-cycle (or target date) funds. We find that life-cycle funds designed to match the risk tolerance and investment horizon of … investors have small welfare costs. All other choices, including life-cycle funds which do not match investors' risk tolerance …