Micro and Macro Implications of Household Behaviour and Financial Decision-Making is a cross-disciplinary seminar series covering research at the intersection of household finance, macro and labour economics. It represents a collaboration between universities and research networks and centres.
 
Seminars are held on Zoom each month and run for 90 minutes including a discussion panel.
 
Our seventh meeting will be on Friday 18th February from 3:30pm-5:00pm GMT and  featuring Mark Aguair (Princeton University) presenting "Who Are the Hand-to-Mouth" (with Mark Bils (University of Rochester) and Corina Boar (NYU and CEPR)). Discussed by Ayşe İmrohoroğlu (University of Southern California) and Greg Kaplan (University of Chicago)  

Registration Link: Meeting Registration - Zoom

Organisers: Richard Blundell, Michael Haliassos, Christopher Hansman, Yigitcan Karabulut, Peter Levell, Benjamin Moll, Tarun Ramadorai, and Polly Simpson.
            
Abstract: Many households hold little wealth. In standard precautionary savings models these households should not only display higher marginal propensities to consume (MPCs), but also higher future consumption growth. In fact, we see from the PSID that such “hand-to-mouth” households do not display higher growth in spending. These households do display much higher average propensities to consume (APCs) than anticipated by the standard savings model. They also exhibit greater volatility of spending and adjust their spending to a greater extent through the number of categories consumed. Consistent with a role for preference heterogeneity, the panel data show that it is the propensity to be hand-to-mouth, not current assets, that predicts low consumption growth, high APC, and other spending differences for the hand-to-mouth. To identify the extent of preference heterogeneity, we consider the model of Kaplan and Violante (2014) with both liquid and illiquid assets, but allow heterogeneity in preferences. To match the data, many poor hand-to-mouth must be relatively impatient and have a fairly high inter-temporal elasticity of substitution (IES). The model shows that preferences play a dominant role in differences in MPCs across consumers and, in particular, mostly explain the higher MPCs for low-asset households.