ORCID: https://orcid.org/0000-0003-2460-619X; Schlafmann, Kathrin und Rodepeter, Ralf
(2012):
Rules of Thumb in Life-cycle Saving Decisions.
In: Economic Journal, Vol. 122, No. 560: pp. 479-501
This is the latest version of this item.
Abstract
We analyse life-cycle saving decisions when households use simple heuristics, or rules of thumb, rather than solve the underlying intertemporal optimisation problem. We simulate life-cycle saving decisions using three simple rules and compute utility losses relative to the solution of the optimisation problem. Our simulations suggest that utility losses induced by following simple decision rules are relatively low. Moreover, the two main saving motives reflected by the canonical life-cycle model - long-run consumption smoothing and short-run insurance against income shocks - can be addressed quite well by saving rules that do not require computationally demanding tasks, such as backwards induction.
Item Type: | Journal article |
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Faculties: | Economics Economics > Chairs > Chair of Empirical Economics |
Subjects: | 300 Social sciences > 330 Economics |
Language: | English |
Item ID: | 19721 |
Date Deposited: | 15. Apr 2014 08:53 |
Last Modified: | 04. Nov 2020 13:01 |
Available Versions of this Item
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Rules of Thumb in Life-Cycle Saving Decisions. (deposited 05. Oct 2011 11:58)
- Rules of Thumb in Life-cycle Saving Decisions. (deposited 15. Apr 2014 08:53) [Currently Displayed]