On the Evolution of the US Consumer Wealth Distribution

Hintermaier, Thomas; Koeniger, Winfried

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On the Evolution of the US Consumer Wealth Distribution

CEPR Discussion Paper No. DP7850

44 Pages Posted: 19 Jul 2010

See all articles by Thomas Hintermaier

Winfried Koeniger

University of St. Gallen; CESifo (Center for Economic Studies and Ifo Institute); Center for Financial Studies (CFS); IZA Institute of Labor Economics; Swiss Finance Institute

Date Written: June 2010

Abstract

We use all available waves of the Survey of Consumer Finances to document the evolution of the wealth distribution in the US since the 1980s. We then rely on the shape of this distribution to estimate a life-cycle incomplete markets model. We find that considering a wide range of net-worth percentiles delivers very precise estimates of the structural parameters, impatience and risk aversion. The estimated model predicts some of the observed changes of the net-worth distribution, in particular for young consumers between ages 26 and 35.

Keywords: incomplete markets, life cycle, simulated method of moments, wealth distribution

JEL Classification: D91, E21

Suggested Citation: Suggested Citation

Hintermaier, Thomas and Koeniger, Winfried, On the Evolution of the US Consumer Wealth Distribution (June 2010). CEPR Discussion Paper No. DP7850, Available at SSRN: https://ssrn.com/abstract=1640372