Household Finance
Journal of Economic Literature
vol. 59,
no. 3, September 2021
(pp. 919-1000)
Abstract
Household financial decisions are complex, interdependent, and heterogeneous, and central to the functioning of the financial system. We present an overview of the rapidly expanding literature on household finance (with some important exceptions) and suggest directions for future research. We begin with the theory and empirics of asset market participation and asset allocation over the life cycle. We then discuss household choices in insurance markets, trading behavior, decisions on retirement saving, and financial choices by retirees. We survey research on liabilities, including mortgage choice, refinancing, and default, and household behavior in unsecured credit markets, including credit cards and payday lending. We then connect the household to its social environment, including peer effects, cultural and hereditary factors, intra-household financial decision-making, financial literacy, cognition, and educational interventions. We also discuss literature on the provision and consumption of financial advice.Citation
Gomes, Francisco, Michael Haliassos, and Tarun Ramadorai. 2021. "Household Finance." Journal of Economic Literature, 59 (3): 919-1000. DOI: 10.1257/jel.20201461Additional Materials
JEL Classification
- D15 Intertemporal Household Choice; Life Cycle Models and Saving
- G41 Behavioral Finance: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets [Neurofinance]
- G50 Household Finance: General
- J26 Retirement; Retirement Policies
- Z13 Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification