on Facebook
on Twitter
on YouTube
Document Information
Intertemporal Consumption with Directly Measured Welfare Functions and Subjective Expectations
Euler equation estimation of intertemporal consumption models imposes heavy demands on data and identifiability conditions. For example, one typically needs panel data on consumption, assumptions on expectations, and a parameterization of preferences. The authors aim at reducing some of these requirements, by using additional information on respondents’ preferences and expectations. The results suggest that individually measured welfare functions and expectations have predictive power for the variation in consumption across households. Furthermore, estimates of the intertemporal elasticity of substitution based on the estimated welfare functions are plausible and of a similar order of magnitude as other estimates found in the literature.
Free, downloadable PDF file(s) are available below.
RAND makes an electronic version of this document available for free as a public service.
Use Adobe Acrobat Reader version 7.0 or higher for the best experience.
This paper series was made possible by the NIA funded RAND Center for the Study of Aging and the NICHD funded RAND Population Research Center.
This product is part of the RAND working paper series. RAND working papers are intended to share researchers' latest findings, to solicit informal peer review, or to publish a technical appendix to an article published in a scientific journal. They have been approved for circulation by the sponsoring RAND research unit but typically have not been formally edited or peer reviewed. Unless otherwise indicated, working papers can be quoted and cited without permission of the author, provided the source is clearly referred to as a working paper.
Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.
The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.
* RAND research is conducted across divisions, centers, and projects; these organizational components are represented in the "Related RAND Divisions" section above.
Top
RAND® is a registered trademark. Copyright © 1994-2009 RAND Corporation. Last Modified: January 11, 2008 