Do households make savings and investment decisions
together?
Please cite as:
Chen, P., Hanna, S. & Montalto, C. P. (1998). Do households make savings
and investment decisions together?
Consumer Interests Annual, 44
This study investigates the empirical relationship between saving-consumption
and portfolio allocation decisions. A two-period intertemporal life cycle
optimal saving-consumption and portfolio allocation model is developed
and employed as the theoretical framework of this study. The 1995 Survey
of Consumer Finances (SCF) cross-sectional survey dataset is used to investigate
the
relationship between household saving-consumption and portfolio allocation
and evidence of response in saving and investment behavior to changes in
expectations of the financial markets.? The empirical results do not support
simultaneous decision-making, suggesting that consumers may not be acting
optimally.
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