Intra-household heterogeneity can quantitatively affect the predictions of life-cycle portfolio choice models. Empirically, double-income households, single-income households and singles have different exposures to background risks and differ in covariates affecting financial decisions, reacting...

We use a long panel with information on expected and realized changes in household finances to study the process of expectation formation and expectation errors, controlling for individual fixed effects. We find that, following improvements in financial situation, individuals tend to form...

Why do Japanese households hold so few stocks? We use a quantitative life-cycle portfolio choice model to argue in favour of two main explanations. First, households have a very low level of trust in the stock market due to Japan's history of poor corporate governance. Second, stock returns to...