Saving for Retirement: Household Bargaining and Household Net Worth

22 Pages Posted: 4 May 2004

See all articles by Shelly J. Lundberg

Shelly J. Lundberg

University of California, Santa Barbara (UCSB); IZA Institute of Labor Economics; University of Bergen - Department of Economics

Jennifer Ward-Batts

Claremont McKenna College - Robert Day School of Economics and Finance; Wayne State University - Department of Economics

Date Written: April 1, 2000

Abstract

Traditional economic models treat the household as a single individual, and do not allow for separate preferences of and possible conflicts of interest between husbands and wives. Since wives are typically younger than their husbands and life expectancy for women exceeds that for men, wives may prefer to save more for retirement than do their husbands. This suggests that households in which wives have greater relative bargaining power may accumulate greater net worth as they approach retirement. Most empirical models of net worth in the literature do not include characteristics of both spouses. We present a more complete unitary model of household net worth and find, among couples in the first wave of the Health and Retirement Survey, that the characteristics of both husband and wife are determinants of net worth. We explore the importance of bargaining in marriages of older couples by examining the empirical relationship between their net worth and factors such as relative control over current income sources, relative age, and relative education. We find some evidence that low relative education of wives is associated with low net worth.

Keywords: Saving for retirement, household bargaining, net worth

Suggested Citation

Lundberg, Shelly J. and Ward-Batts, Jennifer L. and Ward-Batts, Jennifer L., Saving for Retirement: Household Bargaining and Household Net Worth (April 1, 2000). Claremont McKenna College Robert Day School of Economics and Finance Research Paper No. 2004-03, Michigan Retirement Research Center Research Paper No. 2000-004, Available at SSRN: https://ssrn.com/abstract=532822 or http://dx.doi.org/10.2139/ssrn.532822

Shelly J. Lundberg (Contact Author)

University of California, Santa Barbara (UCSB) ( email )

South Hall 5504
Santa Barbara, CA 93106
United States

IZA Institute of Labor Economics

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Germany

University of Bergen - Department of Economics ( email )

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N-5007 Bergen, 5007
Norway

Jennifer L. Ward-Batts

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States

Wayne State University - Department of Economics ( email )

656 W. Kirby
Detroit, MI 48202
United States
313-577-3355 (Phone)