The Intergenerational Correlation of Consumption Expenditures
Kerwin Kofi Charles, Sheldon Danziger, Geng Li, Robert Schoeni
American Economic Review · 2014 · Volume 104 · Issue 5
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.
Keywords
Consumer Economics: Empirical Analysis, Macroeconomics: Consumption, Saving, Wealth
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