TY  - UNPD
A1  - Groneck, Max
A1  - Ludwig, Alexander
A1  - Zimper, Alexander
T1  - The impact of biases in survival beliefs on savings behavior
T2  - SAFE working paper series ; No. 169
N2  - On average young people \undersave" whereas old people \oversave" with respect to the rational expectations model of life-cycle consumption and savings. According to numerous studies on subjective survival beliefs, young people also \underestimate" whereas old people \overestimate" their objective survival chances on average. We take a structural behavioral economics approach to jointly address both empirical phenomena by embedding subjective survival beliefs that are consistent with these biases into a rank-dependent utility (RDU) model over life-cycle consumption. The resulting consumption behavior is dynamically inconsistent. Considering both naive and sophisticated RDU agents we show that within this framework underestimation of young age and overestimation of old age survival probabilities may (but need not) give rise to the joint occurrence of undersaving and oversaving. In contrast to this RDU model, the familiar quasi-hyperbolic discounting (QHD), which is nested as a special case, cannot generate oversaving.
T3  - SAFE working paper - 169 
Y1  - 2017
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/44152
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-441526
PB  - SAFE
CY  - Frankfurt am Main
ER  -