How Will Persistent Low Expected Returns Shape Household Economic Behavior?

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dc.contributor.authorHorneff, Vanya
dc.contributor.authorMaurer, Raimond
dc.contributor.authorMitchell, Olivia S
dc.date2023-05-17T21:42:24.000
dc.date.accessioned2023-05-23T00:29:19Z
dc.date.available2023-05-23T00:29:19Z
dc.date.issued2018-10-02
dc.date.submitted2019-02-06T13:11:53-08:00
dc.description.abstractMany believe that global capital markets will generate lower returns in the future versus the past. We examine how persistently lower real returns will reshape work, retirement, saving, and investment behavior of older persons using a calibrated dynamic life cycle model. In a low return regime, workers build up less wealth in their tax-qualified 401(k) accounts versus the past, claim social security benefits later, and work more. Moreover, the better-educated are more sensitive to real interest rate changes, and the least-educated alter their behavior less. Interestingly, wealth inequality is lower in periods of persistent low expected returns.
dc.description.statementofresponsibilityThe authors are grateful for research support from the German Investment and Asset Management Association (BVI), the SAFE Research Center funded by the State of Hessen and the Pension Research Council/Boettner Center at The Wharton School of the University of Pennsylvania. We also thank the initiative High Performance Computing in Hessen for grating us computing time at the LOEWE-CSC and Lichtenberg Cluster. David Richardson and participants at the 2018 NBER workshop in Jackson Hole, Wyoming provided helpful comments
dc.identifier.urihttps://repository.upenn.edu/handle/20.500.14332/43572
dc.legacy.articleid1017
dc.legacy.fulltexturlhttps://repository.upenn.edu/cgi/viewcontent.cgi?article=1017&context=prc_papers&unstamped=1
dc.rightsOpinions and any errors are solely those of the authors and not of the institutions with which the authors are affiliated, or any individual cited. © 2018 Horneff, Maurer, and Mitchell
dc.source.issue16
dc.source.issueWP2018-07
dc.source.journalWharton Pension Research Council Working Papers
dc.source.statuspublished
dc.subject.classificationG11, G22, D14, D91
dc.subject.other401(k) plan; saving; investment
dc.subject.otherSocial Security claiming; retirement; tax consequences
dc.subject.otherBehavioral Economics
dc.titleHow Will Persistent Low Expected Returns Shape Household Economic Behavior?
dc.typeWorking Paper
digcom.identifierprc_papers/16
digcom.identifier.contextkey13770742
digcom.identifier.submissionpathprc_papers/16
digcom.typeworkingpaper
dspace.entity.typePublication
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relation.isAuthorOfPublication4e7d78a3-4841-4e28-b9a3-beb5047ab4f5
relation.isAuthorOfPublication35f0f29e-9f02-491f-b958-1434c5d08b00
relation.isAuthorOfPublication.latestForDiscovery3ed05e1e-6960-4b66-ae46-dd572186a62e
upenn.schoolDepartmentCenterWharton Pension Research Council Working Papers
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