Household Finance: Education, Permanent Income and Portfolio Choice / Russell Cooper, Guozhong Zhu.

Format:

Book

Author/Creator:

Cooper, Russell.

Contributor:

National Bureau of Economic Research.

Zhu, Guozhong.

Series:

Working Paper Series (National Bureau of Economic Research) no. w19455.

NBER working paper series no. w19455

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Household Finance

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2013.

Summary:

This paper studies household financial choices: why are these decisions dependent on the education level of the household? A life cycle model is constructed to understand a rich set of facts about decisions of households with different levels of education attainment regarding stock market participation, the stock share in wealth, the stock adjustment rate and wealth-income ratio. Model parameters, including preferences, the cost of stock market participation and portfolio adjustment costs, are estimated to match the financial decisions of different education groups. Based on the estimated model, education matters through two channels: the mean of income and the discount factor.

Notes:

Print version record

September 2013.