It has been argued that increased life expectancy raises the rate of return on education, causing a rise in the investment in education followed by an increase in lifetime labor supply. Empirical evidence of these relations is rather weak. Building on a lifecycle model with uncertain longevity,...

Feldstein [1985] posed the questions of what would be the optimal level of retirement benefit, and what would be the optimal mix between the pay-as-you-go system and the funded pension system under the assumption of an exogenous interest rate. We reconsider the problem with the addition of a...

This paper investigates the impact of externalities on economic growth in an AK model. In contrast to the existing literature, the paper considers finitely-lived agents along the continuous time, overlapping generations literature. A series of new results, not holding for infinitely-lived agent...

This paper studies the relationship between consumer incomes and ages of the durable goods consumed. At the household level, it presents evidence from the Consumer Expenditure Survey of a negative correlation between incomes and ages of the vehicles owned. At the aggregate level, it constructs a...

The average age of vehicles in the US has increased by more than 40 percent since the early 1960s. Over the same time period, consumer incomes on average have been growing faster than prices of new vehicles. This paper asks whether greater affordability of vehicles and the resulting increase in...

We build a realistically calibrated life-cycle model of housing decisions under divorce risk. As observed in the data, our model predicts the recent increase in divorce rates leads to reduced homeownership rates. The event of a divorce negatively affects homeownership, and this effect is...

The rate of time preference (RTP) has been observed to be negatively correlated with incomes, but the mechanism behind this correlation is not yet sufficiently understood. Here, I examine it on the basis of fluid intelligence in an economy in which households behave according to the maximum...

The addiction model shows that the decisions of individuals are rational and operate under dynamic patterns linked to time. Past beer consumption conditions present consumption and this, in turn, that of the future. This sequence has been called the social paradigm of choice. The empirical...

This study investigates the hypothesis that shifts in women’s relative income, which affects their bargaining power in the household, have discernible effects on aggregate saving due to differing saving propensities by gender. An analytical framework for pooled and non-pooled savings...

We consider a neoclassical growth model with quasi-hyperbolic discounting under Kantian optimization: each temporal self acts in a way that they would like every future self to act. We introduce the notion of a Kantian policy as an outcome of Kantian optimization in a given class of policies. We...