Data and Code for: Scarred Consumption
Principal Investigator(s): View help for Principal Investigator(s) Ulrike Malmendier, University of California-Berkeley; Leslie Sheng Shen, Federal Reserve Bank of Boston
Version: View help for Version V1
| Name | File Type | Size | Last Modified |
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| Figures | 02/10/2023 09:35:PM | ||
| Tables | 02/10/2023 09:37:PM | ||
| code | 02/10/2023 11:25:PM | ||
| data | 02/10/2023 09:35:PM | ||
| raw | 07/04/2023 11:39:PM | ||
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application/pdf | 276.3 KB | 07/07/2023 02:25:PM |
Project Description
Summary:
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We show that prior lifetime experiences can "scar" consumers. Consumers who have lived through times of unemployment exhibit persistent pessimism about their future financial situation and spend significantly less years later, controlling for income, employment, and other life-cycle consumption factors. Due to their experience-induced frugality, scarred consumers build up more wealth. We use a stochastic life-cycle model to show that financial constraints and traditional models of income and unemployment scarring fail to generate the negative relationship between past experiences and consumption, while it is consistent with experience-based learning.
Scope of Project
JEL Classification:
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D12 Consumer Economics: Empirical Analysis
D15 Intertemporal Household Choice; Life Cycle Models and Saving
D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
D12 Consumer Economics: Empirical Analysis
D15 Intertemporal Household Choice; Life Cycle Models and Saving
D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
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