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  3. American Economic Review
  4. May 2015
  5. The Composition Effect of Consumption around Retirement: Evidence from Singapore

The Composition Effect of Consumption around Retirement: Evidence from Singapore

  • Sumit Agarwal
  • Jessica Pan
  • Wenlan Qian
American Economic Review
vol. 105, no. 5, May 2015
(pp. 426-31)
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Abstract

It is well established that consumption is "hump" shaped over an individual's lifecycle, peaking in middle age and then declining in the years that follow. Prior research has documented that consumption declines at retirement, which is inconsistent with the standard lifecycle model with consumption smoothing. Using a unique dataset with detailed administrative records of credit and debit card transactions, we show the hump shaped lifecycle consumption pattern as documented in the literature. Additionally, we show compositional changes in consumption expenditures across individuals in the years surrounding retirement confirming the results of Aguiar and Hurst (2005, 2013).

Citation

Agarwal, Sumit, Jessica Pan, and Wenlan Qian. 2015. "The Composition Effect of Consumption around Retirement: Evidence from Singapore." American Economic Review, 105 (5): 426-31. DOI: 10.1257/aer.p20151005

Additional Materials

JEL Classification

  • D12 Consumer Economics: Empirical Analysis
  • D15 Intertemporal Household Choice; Life Cycle Models and Saving
  • J26 Retirement; Retirement Policies