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
table_a12_lambda1_10.tex	application/x-tex	571 bytes	02/10/2023 04:35:PM
table_a12_lambda1_10.txt	text/plain	271 bytes	02/10/2023 04:35:PM
table_a12_lambda1_10.xml	application/vnd.ms-spreadsheetml	5.3 KB	02/10/2023 04:35:PM
table_a12_lambda1_12.tex	application/x-tex	568 bytes	02/10/2023 04:35:PM
table_a12_lambda1_12.txt	text/plain	268 bytes	02/10/2023 04:35:PM
table_a12_lambda1_12.xml	application/vnd.ms-spreadsheetml	5.3 KB	02/10/2023 04:35:PM
table_a12_lambda1_6.tex	application/x-tex	575 bytes	02/10/2023 04:35:PM
table_a12_lambda1_6.txt	text/plain	275 bytes	02/10/2023 04:35:PM
table_a12_lambda1_6.xml	Unknown	5.3 KB	02/10/2023 04:35:PM
table_a12_lambda1_8.tex	application/x-tex	572 bytes	02/10/2023 04:35:PM

Project Description

Summary:

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:
      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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Published Versions

V1 [2023-12-15]

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