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Household Portfolio Choice and Retirement

Jawad M. Addoum

Cornell University, S.C. Johnson College of Business, Charles H. Dyson School of Applied Economics and Management

The Review of Economics and Statistics 2017

This study examines household portfolio choice through the retirement transition. I show that couples significantly decrease their stock allocations after retirement, whereas singles’ allocations remain relatively unchanged. Reallocations are concentrated among couples in which the wife is more risk averse than her husband. Husbands’ and wives’ respective retirement events are followed by opposite-signed changes in stock allocations. These findings are consistent with a model of collective household decision making in which spouses have heterogeneous risk preferences, and suggest that dynamics in the distribution of intrahousehold bargaining power generate time-varying household risk aversion.

DOI
10.1162/rest_a_00643
Volume
99 (5)
Pages
870-883
Language
en
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