The impact of wealth on consumption and retirement behaviour in the UK

David Blake

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Housing and pension wealth are shown to be important determinants of personal sector consumption and retirement behaviour in the UK. Housing and state pension wealth have a positive effect on consumption, while private pension wealth promotes greater savings. Greater private defined benefit pension wealth encourages earlier retirement, while greater de¯ned contribution pension wealth has the e®ect of delaying retirement. State pension wealth appears to have no effect on the retirement decision. Other variables relating to income, labour market and demographic status and spillovers from other sectors are also shown to be important. The consumption equation forecasts the late 1980s boom and the early 1990s slump in the UK better than other models that disregard housing and pension wealth. A particularly important cause of the boom was the huge private pension fund surpluses that accrued as a result of the stock market boom of the 1980s.

Keywords: Merton model; consumption; retirement; financial wealth; housing wealth; pension wealth; human capital (search for similar items in EconPapers)
JEL-codes: C51 C52 C53 E21 G23 J26 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2002-10-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The impact of wealth on consumption and retirement behaviour in the UK (2004)
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