Showing papers by "Annamaria Lusardi published in 2000"

Explaining Why So Many Households Do Not Save

Abstract: There are vast differences in wealth holdings, even among households in similar age groups. In addition, a large percentage of U.S. households arrive close to retirement with little or no wealth. While many explanations can be found to rationalize these facts, approximately thirty percent of households whose head is close to retirement have done little or no planning for retirement. Planning is shaped by the experience of other individuals: individuals learn to plan for retirement from older siblings. They also learn from the experience of old parents. In particular, unpleasant events, such as financial difficulties and health shocks at the end of life, provide incentives toward planning. In addition, planning affects wealth levels as well as portfolio choice. Individuals who plan are more likely to hold large amounts of wealth and to invest their wealth holdings in high return assets, such as stocks. Thus, planning plays an important role in explaining the saving behavior of many households.

Precautionary Saving and the Accumulation Of Wealth

Abstract: In this paper, I estimate the extent of precautionary accumulation using data from a new survey: the US Health and Retirement Study, which samples older households I account for many determinants of wealth, not only past economic circumstances and expectations about future resources, but also individual preferences, such as risk aversion and impatience In addition and most importantly, I account for risk using subjective data on the probability of job loss in the future

Savings of Young Parents

Abstract: In this paper, we examine household savings using data from the National Longitudinal Survey, Cohort 1997 (NLSY97). This data set provides detailed information about assets and liabilities of parents with teen-age children and allows researchers to examine patterns of accumulation at early stages of the life cycle. In our empirical work, we have first to deal with several problems in measuring wealth. While many respondents report owning assets and liabilities, they often do not report their values. This problem is severe, in particular among financial assets. It is also difficult to devise an appropriate measure of accumulation when examining young parents, since assets and liabilities display different degrees of liquidity. To get around the non-response problem, we impute the missing values for assets and liabilities. This allows us to calculate household wealth for the whole sample. We examine household wealth holdings by considering several measures of accumulation: total (non-pension) net worth, financial net worth, and retirement savings. We study their distribution across different demographic groups and show that many households, in particular those headed by young parents (younger than 35), minorities, and individuals with low educational attainment, display very little accumulation. Many have no financial assets and their total net worth is also low. Housing equity is the main asset in many household portfolios and often the only asset families own. Overall, there is much heterogeneity in wealth holdings not only across but also within demographic groups. This suggests that many factors are at play in shaping the wealth accumulation of parents with young children.