An experimental test on dynamic consumption and lump-sum pensions

Fatás, Enrique, Lacomba, Juan A., Lagos, Francisco and Moro-Egido, Ana I. (2013) An experimental test on dynamic consumption and lump-sum pensions. SERIEs, 4 (4). pp. 393-413. ISSN 1869-4195

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This article examines the potential risks on consumption behavior of lump-sum payments. As a pension, lump-sum payments could be consumed too fast and generate an increase of poverty rates. We experimentally investigate consumption behavior in an inter-temporal decision-making setting. Subjects make consumption and saving decisions in an environment with two central features: first, there exists a decreasing probability of survival; and second, in addition to the regular income they get while active, they receive a unique lump-sum payment when retired. The results of this experiment show that rather than consuming too much during their income periods, subjects show a persistent precautionary saving behavior and over-save in the vast majority of periods. This result seems to be mainly driven by the risk averse individuals.

Item Type: Article
Uncontrolled Keywords: experimental test,consumption,savings,lump-sum payment,c91,h55,j26
Faculty \ School: Faculty of Social Sciences > School of Economics
Related URLs:
Depositing User: Pure Connector
Date Deposited: 15 Nov 2013 14:14
Last Modified: 24 Oct 2022 05:02
DOI: 10.1007/s13209-013-0098-y

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