Reference–dependent preference models assume that agents derive utility fromdeviations of consumption from benchmark levels, rather than from consumptionlevels. These references can be either backward-looking (as explicit in the Habit literature) or forward-looking (as implicitly suggested by...

This paper analyzes the important time variation in U.S. aggregate portfolio allocations. To do so, we first use flexible descriptions of preferences and investment opportunities to derive optimal decision rules that nest tactical, myopic, and strategic portfolio allocations. We then compare...

Both educational expenditures and attainment have increased sharply over the last decades, despite rising prices of education, and stagnating income returns to human capital. This paper emphasizes conditional employment risks diversification as additional motivation for education demand. Job...

Reference-dependent preference models assume that agents derive utility from deviations of consumption from benchmark levels, rather than from consumption levels. These references can be either backward-looking (as explicit in the Habit literature) or forward-looking (as implicitly suggested by...

This study focuses on dynamic asset pricing implications for consumption and portfolio shares. First, we exploit the investors' intertemporal budget constraint and the induced national saving identity to construct US total wealth. We then document the empirical shares using aggregate consumption...