Intergenerational Linkages in Consumption Behavior

Donald Cox (), Serena Ng () and Andreas Waldkirch ()

No 1791, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: Consumption is partly a social activity, yet most studies of consumer behavior treat households in isolation. We investigate familial relationships in consumption patterns using a sample of parents and their children from the Panel Study of Income Dynamics. We find a positive and statistically significant parent-specific effect on children¹s consumption even after controlling for the effect of parental income, and we find similar effects for sibling pairs. Child consumption responds negatively to large post-retirement shortfalls in consumption of the parents. This behavior holds up even after allowing for the possibility of smaller parent-to-child transfers made necessary by the parental consumption shortfalls. These results suggest that although income is an important source of the intergenerational correlation, parental choices and experiences also affect consumption behavior of the children.

Keywords: Family; income; tastes; retirement; learning. (search for similar items in EconPapers)
JEL-codes: D10 D12 E21 J26 (search for similar items in EconPapers)
Date: Written 2000-08-01
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Working Paper: Intergenerational Linkages in Consumption Behavior (2000)
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