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American Economic Review Vol. 105 No. 5 2015

Bankruptcy Rates among NFL Players with Short-Lived Income Spikes

Kyle Carlson1; Joshua Kim2; Annamaria Lusardi3; Colin F. Camerer4

1 Caltech, 1200 E. California Boulevard, Pasadena, CA 91125 (e-mail: ) · 2 University of Washington, 33105 49th Avenue SW, Federal Way, WA (e-mail: ) · 3 School of Business, George Washington University, 2201 G Street, NW, Suite 450E, Duquès Hall, Washington, DC 20052 (e-mail: ) · 4 HSS Caltech 228-77, 1200 E. California Boulevard, Pasadena, CA 91125 (e-mail: )

Abstract

We test for consumption smoothing using bankruptcy data on players in the National Football League (NFL), who typically earn several million dollars during an income spike that lasts a few years. The life-cycle hypothesis predicts that players should save substantially while playing and then have little risk of bankruptcy post-NFL. However, players in our sample begin to file for bankruptcy soon after they stop playing and continue filing at a high rate through at least the first 12 years of retirement. Players' total earnings and career lengths have surprisingly little effect on the risk of bankruptcy.

DOI
10.1257/aer.p20151038
Volume
105
Issue
5
Pages
381-384
Language
en
Sources
bibtex:phds-export.bib crossref openalex

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