Please note: Martin has left the "Economics" group at Duke University; some info here might not be up to date.
| Office Location: | 130 Rubenstein Hall |
| Email Address: | |
| Web Page: | http://www.econ.duke.edu/~ms62 |
Typical Courses Taught:
| Ph.D. Economics (expected) | Duke University, Durham, NC | 2006 |
| Diploma in Economics | University of Mannheim, Germany | 2001 |
My job market paper investigates how subjective mortality expectations and heterogeneity in time and risk preferences affect the consumption and saving behavior of the elderly. Previous studies find that the large wealth disparities observed among the elderly cannot be explained by differences in preferences. In contrast, this study identifies a strong relationship between answers to survey questions about time and risk preferences and consumption and saving behaviors. Previous literature has made scarce use of information on time and risk preferences elicited directly from survey questions. This paper uses data that merge information about preferences and subjective mortality expectations from the Health and Retirement Study with detailed consumption data from two waves of the Consumption and Activities Mail Survey. The life cycle model predicts a specific relationship between consumption growth, subjective mortality expectations, consumption risk, and time and risk preference parameters. The restrictions imposed by this relationship, together with information on attitudes towards risk and towards the future, allow the estimation of time discount rates and risk aversion parameters. The main results of this paper are the following. First, consumption and saving choices vary with subjective mortality rates and reported time and risk preferences in a way that is consistent with the life cycle model. Second, there is substantial heterogeneity in the estimated time discount rates and risk aversion parameters. These results indicate that heterogeneous preferences should play a role in explaining the large wealth dispersion observed in the data, even for households with similar earning histories.