Single again? Saving patterns when widowhood occurs

Cristina Rossi and Eva Sierminska

No 2015-04, LISER Working Paper Series from Luxembourg Institute of Socio-Economic Research (LISER)

Abstract: In this paper we examine the effect of widowhood on asset trajectories. In many industrialized countries, close to half of households are headed by women single, divorced, separated or widowed and therefore their ability to make financial decisions is crucial for their economic well-being as well as their dependents’. Meanwhile, research has found that women tend to be less involved with the stock market and have lower financial sophistication, leaving them out of an important way of accumulating resources via investing and saving. At the same time their higher risk aversion may have sheltered them from some of the effects of the financial crisis. For a two-adult household, the portfolio structure is likely to reflect preferences of the main financial decision maker (usually the husband). When widowhood occurs it could be that singles re-optimize their decisions according to their own preferences. We test this by examining whether there is a change in the wealth accumulation for households (over 60) that have experienced the shock of becoming widowed. Our results indicate there to be an initially statistically significant effect of widowhood on wealth -- differential for women and men. The effect disappears once we control for health insurance, but re-appears several years after the shock suggesting a differential willingness to save for women and men.

Keywords: wealth trajectories; household portfolios; widowhood; gender; bargaining (search for similar items in EconPapers)
JEL-codes: D91 J12 J14 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2015-10
New Economics Papers: this item is included in nep-age
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