CEPR European Conference on Household Finance 2019

CEPR European Conference on Household Finance 2019

CEPR-TFI Event at Rodos Palace Hotel: Thursday 19 September 2019
Household Finance Conference at Rodos Palace Hotel: Friday 20 September-Saturday 21 September 2019

CEPR-TFI Event: Thursday 19 September 2019

17:30-18:00 Registration

18:00-19:30 CEPR-TFI Event –  Bigtech and Fintech
-    Welcome: Mark Cliffe, Chief Economist & Head of Global Research of the ING Group
-    Opening Remarks: Andreas Fuster (Swiss National Bank and CEPR) and Amit Seru
     (Stanford University and CEPR)

Speakers: 
-    Leonardo Gambacorta, Head of Innovation and the Digital Economy (BIS and CEPR)
-    Devie Mohan, Co-founder and CEO (Burnmark)
-    Tommaso Valletti, Professor of Economics (Imperial College London and CEPR)

Panel Discussion

Chair: Amit Seru (Stanford University and CEPR)

 

19:30-20:30  Drinks Reception 

 

        Household Finance Conference: Friday 20 September 2019

08:45-09:15          Coffee and Registration

09:15-09:30          Opening Remarks
                              Alex Michaelides, Imperial College London and CEPR
                              Michael Haliassos, Goethe University Frankfurt and CEPR

 

Session Chair:     Alex Michaelides (Imperial and CEPR)
    
09:30-10:15          Can Security Design Solve Household Reluctance to Take Risk?
                              Laurent Calvet, EDHEC Business School, CFS and CEPR (with                                                      Claire Celerier, Paolo Sodini and Boris Vallee)

                              Discussant: Tarun Ramadorai, Imperial College London and CEPR

10:15-11:00           Housing Bubbles, Wealth Inequality and Capital Income Taxation
                              Clara Martínez-Toledano, Paris School of Economics

                              Discussant: Laurent Bach, ESSEC

11:00-11:30           Coffee Break

 

Session Chair:    Steffen Andersen (Copenhagen Business School and CEPR)

11:30-12:15         Joint and Individual Savings in a Family:  Evidence From Bank Accounts
                             Merike Kukk, Tallinn University of Technology (with W. Fred van Raaij)

                             Discussant: Kim Peijnenburg (EDHEC and CEPR)

12:15-13:00          Alternative Facts in Peer-to-Peer Loans? Borrower Misreporting Dynamics and                               Implications
                             Vesa Pursiainen, University of Hong Kong 

                             Discussant: Matti Keloharju, Aalto University and CEPR

13:00-14:00          Lunch

                             Poster presentation by diaNEOsis on aspects of the Greek economy and crisis:
                             Fay Makantasi, Research Analyst at diaNEOsis and Adjunct Assistant                                             Professor at Athens University of Economics and Business (AUEB)

Session Chair:    Tullio Jappelli (University of Naples Federico II, CSEF and CEPR)

14:00-14:45         Savings after Retirement: Homeownership, Preferences or Risks?
                             Rory McGee, University College London

                             Discussant:  Arpit Gupta, NYU Stern

14:45-15:30         Default Options and Retirement Saving Dynamics
                            Taha Choukhmane, Yale University

                             Discussant: Michaela Pagel, Columbia University and CEPR  

15:30-15:45         Coffee Break

15:45-16:30         Consuming Dividends 
                             Konstantin Bräuer, Goethe University Frankfurt (with Andreas Hackethal and                                 Tobin Hanspal)

                             Discussant: Stephen Zeldes, Columbia University 

16:30-17:30         Network Steering Committee Meeting

18:00-20:00         Old and New City Tour

20:30                   Dinner at 12 Nissia, Rodos Palace Hotel
                            Conference Dinner Speech by Gikas Hardouvelis, University of Piraeus and                                  CEPR

 

 

       Household Finance Conference: Saturday 21 September 2019

 

Session Chair:   Russell Cooper (European University Institute)

09:45-10:30         Subjective Return Expectations, Inattention and Stock Market Participation
                             Hector Calvo Pardo, University of Southampton

                             Discussant: Raman Uppal, EDHEC Business School and CEP

10:30-11:15         Bailing out the Kids: New Evidence on Intra-family Insurance from 1 Billion Bank                              Transfers

                            Adam Sheridan, University of Copenhagen (with Asger Lau Andersen and                                      Niels Johannesen)

                            Discussant: Tullio Jappelli, Università di Napoli Federico II and CEPR 

11:15-11:30          Coffee Break

 

Session Chair:   Monica Paiella (University of Naples Partenope and CEPR)

11:30-12:15         Reference Points in the Housing Market
                            Tarun Ramadorai, Imperial College London and CEPR (with Steffen Andersen,                               Cristian Badarinza, Lu Liu and Julie Marx)

                            Discussant: Joao Cocco, London Business School and CEPR

12:15-13:00         MPC Heterogeneity in Europe: Sources and Policy Implications
                             Julia Le Blanc, Deutsche Bundesbank (with Miguel Ampudia, Russell Cooper                                  and Guozhong Zhu)

                             Discussant: Monica Paiella, Università di Napoli Parthenope

13:00-14:00          Lunch 

                             Lunch Speaker: Thodoris Georgakopoulos, Editorial Director of diaNEOsis

                               

Session Chair:   Michael Haliassos (Goethe University Frankfurt and CEPR)

14:00-14:45         Gig-Labor: Trading Safety Nets for Steering Wheels 
                             Jordan Nickerson, Boston University (with Ankit Kalda, Vyacheslav Fos and                                    Naser Hamdi)

                             Discussant: Steffen Andersen (Copenhagen Business School and CEPR)

14:45-15:00         Closing remarks
                             Michael Haliassos, Goethe University Frankfurt and CEPR

 

Note: Presenters have 25 mins to present their paper. A total of 15 mins are allocated to the discussants and 5 mins for general discussion.

Organising committee members: Laurent E. Calvet (EDHEC Paris, CFS, and CEPR), Joao Cocco (London Business School, CFS, and CEPR), Russell Cooper (European University Institute), Francisco Gomes (London Business School and CEPR), Luigi Guiso (EIEF and CEPR), Michael Haliassos (Goethe University Frankfurt and CEPR), Tullio Jappelli (University of Naples Federico II, CSEF and CEPR), Matti Keloharju (Aalto University and CEPR), Alex Michaelides (Imperial College and CEPR), Monica Paiella (University of Naples Parthenope), Wenlan Qian (National University of Singapore), Tarun Ramadorai (Imperial Business School and CEPR), Antoinette Schoar (MIT and CEPR), Paolo Sodini (Stockholm School of Economics and SHoF), Raman Uppal (EDHEC and CEPR), Stephen Zeldes (Columbia University and NBER).

CEPR-TFI Event –  Bigtech and Fintech

CEPR-TFI Event: Bigtech and Fintech

Thursday 19 September 2019

 

18:00-19:30 CEPR-TFI Event –  Bigtech and Fintech
-    Welcome Slides: Mark Cliffe, Chief Economist & Head of Global Research (ING Group)
-    Opening Remarks: Andreas Fuster, Economic Advisor (Swiss National Bank and CEPR) and  Amit Seru, Professor of Finance (Stanford University and CEPR)

 

Speakers: 
-    Slides - Leonardo Gambacorta, Head of Innovation and the Digital Economy (BIS and CEPR)
-    Devie Mohan, Co-founder and CEO (Burnmark)
-    Tommaso Valletti, Professor of Economics (Imperial College London and CEPR)

Panel Discussion

Chair: Amit Seru, Professor of Finance (Stanford University and CEPR)

CEPR European Conference on Household Finance 2019: Summary

September 2019

By Yigitcan Karabulut

Frankfurt School of Finance and Management and CEPR

The 2019 edition of the CEPR European Conference on Household Finance, held with the support of the Think Forward Initiative, took place on 20-21 September in Rhodes, Greece. This summary describes the main themes emerging from the papers presented at the conference.

The 2019 edition of the European Workshop on Household Finance was organized by the CEPR Network on Household Finance. The local organizers for this edition were Alex Michaelides and Michael Haliassos. The Workshop was sponsored by Copenhagen Business School, EDHEC Business School, London Business School, Swedish House of Finance, and the Think Forward Initiative.

The Network runs the European Conference on Household Finance in the autumn of each year since 2015, with its origins back to 2010, alongside its Spring Workshop launched in 2016. On the evening before, the Think Forward Initiative and CEPR organize an event that includes a panel discussion around issues of topical interest. This edition’s event was organized by Adreas Fuster and Amit Seru and focused on “Bigtech and Fintech” (for information, see here). This summary presents the main themes that emerged from papers presented at the conference.

Product Design and Household Economic Behavior

It is well-documented that many households make suboptimal investment and financial choices that have long-lasting effects on wealth accumulation and their economic well-being. A natural question is whether financial product providers and regulators can help households limit their financial mistakes.

Using a comprehensive administrative panel of Swedish households, Calvet, Celerier, Sodini, and Vallee (2019) study how security design affects household financial behavior. The authors document that the introduction of capital-protected investments and their broad adoption significantly foster household financial risk taking, with the effect being more pronounced among households exhibiting a high reluctance to take financial risk before the introduction of such products. The authors also investigate theoretically the possible underlying economic mechanism and find that disappointment aversion and narrow framing have the potential to explain their findings.

Despite the extensive literature on the short-term effects of automatic enrollment in retirement savings plans on household savings, little is known about the long-term effects of such policies. This is particularly important, as this policy’s main objective is to increase retirement security. Accordingly, Choukhmane (2019) studies whether automatic enrollment in retirement savings plans increases lifetime wealth accumulation and welfare. The author documents that employees seem to offset the short-run positive effect of automatic enrollment by saving less in the future. A lifecycle model estimated on data from U.S. retirement savings plans predicts that the long-term effect of auto-enrollment on wealth is negligible except at the bottom of the lifetime earnings distribution.

House prices and household wealth

Housing constitutes the largest share of assets owned for most households. The highly leveraged nature of housing investments as well as their importance in household portfolios, especially in retirement, make understanding household decisions in the housing market and dynamics of house prices crucial.

Andersen, Badarinza, Liu, Marx, and Ramadorai (2019) formally model household listing behavior in the housing market, and structurally estimate household preference and constraint parameters using data on all transactions and electronic listings of owner-occupied housing in Denmark. The authors find that sellers optimize expected utility from property sales, subject to down-payment constraints, and internalize the effect of their choices on final sale prices and time on-the-market. A novel fact that the authors document is that gains and down-payment constraints have interactive effects on listing prices. The authors further show that, in the housing market, households exhibit reference dependence around the nominal purchase price and modest loss-aversion.

Martinez-Toledano (2019) focuses on the distributional effects of house price changes and studies the implications of housing booms and busts for wealth inequality in Spain. Using rich micro and macro data, the author first develops a new asset-specific decomposition of wealth accumulation, and shows that the tail inequality, as measured by the top 10% wealth share, decreases during housing booms, while the decreasing pattern reverts during bust periods. She further shows that differences in capital gains along the wealth distribution seem to be the main driver of the drop in wealth concentration during housing busts, whereas persistent differences in saving rates across wealth groups and portfolio rebalancing towards financial assets among the rich households appear to derive the reverting evolution in wealth concentration during housing busts.

McGee (2019) develops and estimates a structural model of retirement saving decisions with realistic risks, housing, and heterogeneity in bequest preferences. Exploiting exogenous policy changes, the author shows that estimated bequest motives differ across households and roughly half of the sample has no bequest motive. Housing explains a substantial fraction of the level of wealth holdings in retirement, and a large fraction of increases in house prices are passed on to future generations.

Stock Market, Monetary Policy, and Household Consumption

Ampudia, Cooper, Le Blanc, and Zhu (2019) use a life-cycle framework to study household choices and their implications for the effects of monetary policy on household consumption, and show that monetary policy, operating through its effects on household income and asset market returns, has a differential impact on individuals within and across countries. The authors show that poorer households tend to respond more to the income variations produced by monetary policy innovations, whereas rich households respond more to policy-induced variations in stock returns.

Using detailed individual level information, Braeuer, Hackethal, and Hanspal (2019) study why investors buy dividend-paying assets and how they time their consumption accordingly to anticipated income. The authors show that private consumption is excessively sensitive to dividend income and that individuals increase their spending precisely around dividend receipt. Their findings also suggest that excess sensitivity is driven by financially sophisticated individuals who anticipate dividend income and plan to consume out of dividends.

Calvo-Pardo (2009) studies the effect of subjective return expectations on the financial risk-taking behavior of French households. The author first documents widespread dispersion in beliefs about current and future stock market performance among households. Using both theoretical and empirical methods, he further shows that attention to current market conditions influences the

decision to hold stocks through its effect on the expectation of a positive stock market return, particularly among the young and the wealthier households.

Household Debt and Technology

Fos, Hamdi, Kalda, and Nickerson (2019) study the role of the rise of gig-economy in household response to job loss by studying the introduction of Uber across different geographic regions in the US. The authors show that laid-off employees with access to Uber are less likely to apply for unemployment insurance benefits, rely less on household debt, and experience fewer delinquencies, suggesting that the introduction of Uber had a profound effect on labor markets.

Pursiainen (2019) develops a misreporting index and investigates the implications and determinants of borrower misreporting in peer-to-peer loans for credit card debt repayment and consolidation. The author finds that his misreporting index displays significant predictive power for the likelihood of defaults, which seems not to be incorporated in loan prices in the form of higher interest rates. Further analysis suggests that misreporting is more prevalent in areas with lower social capital, among borrowers who face greater income uncertainty or whose professions are considered less honest.

Intra-Household Asset Allocation and Insurance

Intra-household allocation of financial products and powers forms a budding literature in household finance. Andersen, Johannesen, and Sheridan (2019) focus on intra-family insurance by exploiting a rich transaction-level data on income, spending and intra-family bank transfers between parents and their children. The authors show that cash transfers from parents to children respond little to the changes in child income, but still constitute an important source of insurance for children who are in the bottom of the income distribution, and notably when their parents are wealthy.

Using transaction level data, Kukk and van Raaij (2019) focus on the distribution of financial assets within a household by studying the effects of having a joint or individual account on the saving behavior of household members. The authors show that savings are not equally allocated for the majority of the sampled households. Surprisingly, they also find that having joint accounts results in a more uneven distribution of savings across the partners within a household.