American Economic Review: Vol. 104 No. 5 (May 2014)


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The Intergenerational Correlation of Consumption Expenditures

Article Citation

Charles, Kerwin Kofi, Sheldon Danziger, Geng Li, and Robert Schoeni. 2014. "The Intergenerational Correlation of Consumption Expenditures." American Economic Review, 104(5): 136-40.

DOI: 10.1257/aer.104.5.136


Using data recently collected by the Panel Study of Income Dynamics, we find that the intergenerational correlation in expenditures is no larger than that in income, suggesting limited intra-family risk-sharing. On the other hand, even after controlling for the intergenerational correlation in income, the expenditures correlation remains significant. This suggests that other factors such as preferences, access to credit, and non-pecuniary inter vivos transfers potentially played a role in consumption smoothing across generations within a family. We also find that the correlation coefficients estimated using food and imputed total expenditures are smaller than that estimated using the measured total expenditures.

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Charles, Kerwin Kofi (U Chicago)
Danziger, Sheldon (Russell Sage Foundation)
Li, Geng (Federal Reserve Board)
Schoeni, Robert (U MI)

JEL Classifications

D12: Consumer Economics: Empirical Analysis
E21: Macroeconomics: Consumption; Saving; Wealth

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