Insatiable Wealth Preference: Evidence from Japanese Household Survey

Mika Akesaka, Ryo Mikami and Yoshiyasu Ono

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: This study theoretically considers household behavior with wealth preference and empirically investigates the validity of insatiable wealth preference using a nationally representative survey. With wealth preference, the marginal rate of substitution of asset holdings for consumption depends on the nominal interest rates of assets at each point in time. From this property, we derive a reduced-form model and estimate it to find that the marginal utility of holding financial assets remains strictly positive as asset holdings increase and has a strictly positive lower bound; that is the insatiability of wealth preference. We also show that this property plays a crucial role in creating secular demand stagnation and expanding asset price bubbles.

Date: 2024-04, Revised 2024-10
New Economics Papers: this item is included in nep-fdg and nep-upt
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Working Paper: Insatiable Wealth Preference: Evidence from Japanese Household Survey (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:1241rr

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