This project aims to examine the importance of family background in explaining the wide dispersion in savings rates among U.S. households. They propose to examine inter-generational patterns in savings behavior in order to discriminate among three plausible sources of parental influence on children's savings: preferences, skills, and investment aptitude. They will also examine the relationship between self-reported measures of attitudes toward planning and saving and household behaviors.
Potential Implications of the Study:
- By estimating a behavior model of saving, they will present evidence on the importance of preferences, risk aversion, and other parameters in individual savings behaviors. For example, they will be able to answer whether people who are high earner types also tend to be the types who make better investments.
- They will use the model to assess the consequences of different types of heterogeneity for savings and asset accumulation.
- They will address the extent to which parents transmit to children certain attributes that affect their savings choices.
- They will also examine the extent to which demographic differences across families can explain wealth inequality and the extent to which differences in savings and wealth can be explained by differences in rates of return on investments.
