Household Portfolio Allocation Over the Life Cycle

James Poterba and Andrew Samwick

No 6185, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper, we analyze the relationship between age and portfolio structure for households in the US. We focus on both the probability that households of different ages own particular portfolio assets and the fraction of their net worth allocated to each asset category. We distinguish between age and cohort effects using data from the repeated cross-sections of the Federal Reserve Board's Surveys of Consumer Finances. We present two broad conclusions. First, there are important differences across asset classes in both the age-specific probabilities of asset ownership and in the portfolio shares of different assets at different ages. The notnion that all assets can be treated as identical from the standpoint of analyzing household wealth accumulation is not supported by the data. Institutional factors, asset liquidity, and evolving investor tastes must be recognized in modeling asset demand. These factors could affect analyses of overall household saving as well as the composition of this saving. Second, there are evident differences in the asset ownership probabilities of different birth cohorts. Currently, older households were more likely to hold corporate stock, and less likely to hold tax-exempt bonds, than younger households at any given age. These differences across cohorts are important to recognize when analyzing asset accumulation profiles.

JEL-codes: E21 G11 (search for similar items in EconPapers)
Date: 1997-09
Note: AG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (77)

Published as Household Portfolio Allocation over the Life Cycle , James M. Poterba, Andrew Samwick. in Aging Issues in the United States and Japan , Ogura, Tachibanaki, and Wise. 2001

Downloads: (external link)
http://www.nber.org/papers/w6185.pdf (application/pdf)

Related works:
Chapter: Household Portfolio Allocation over the Life Cycle (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:6185

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w6185

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by (wpc@nber.org).