Work

Comparing the response of different education groups to predictable changes in income

Year: 2025

Type: article

Abstract: The Permanent Income Hypothesis (PIH) can be tested using the excess-sensitivity test, which investigates whether current consumption is affected by predictable changes in income. Several studies have shown that households are overly sensitive to changes in current income, especially if they have low assets. This study shows that university educated households behave according to PIH, but that less educated households are excessively sensitive to predictable changes in income. This result is consistent with the idea that university-educated households are more patient.

Source: Journal of Macroeconomics

DOI: 10.1016/j.jmacro.2025.103676

Author: Charles Grant

Institution: Brunel University of London

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,140

OpenAlex ID: W4409199911

FWCI:

Cites: 26

Cited by:

Related to: 10