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American Economic Review Vol. 104 No. 5 2014

The Intergenerational Correlation of Consumption Expenditures

Kerwin Kofi Charles1; Sheldon Danziger2; Geng Li3; Robert F. Schoeni4

1 Harris School of Public Policy, University of Chicago, 1155 E. 60th St., Chicago, IL 60637 (e-mail: ) · 2 Russell Sage Foundation. 112 E. 64th St., New York, NY 10065 (e-mail: ) · 3 Federal Reserve Board. 20th and C St. NW, Washington, DC 20551 (e-mail: ) · 4 University of Michigan. 426 Thompson St., Ann Arbor, MI 48109 (e-mail: )

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Abstract

Using data recently collected by the Panel Study of Income Dynamics, we find that the intergenerational correlation in expenditures is no larger than that in income, suggesting limited intra-family risk-sharing. On the other hand, even after controlling for the intergenerational correlation in income, the expenditures correlation remains significant. This suggests that other factors such as preferences, access to credit, and non-pecuniary inter vivos transfers potentially played a role in consumption smoothing across generations within a family. We also find that the correlation coefficients estimated using food and imputed total expenditures are smaller than that estimated using the measured total expenditures.

DOI
10.1257/aer.104.5.136
Volume
104
Issue
5
Pages
136-140
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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