Food Expenditure and Involuntary Retirement: Resolving the Retirement-Consumption Puzzle

International research has shown that household expenditure on nondurables significantly decreases at retirement -a finding that is inconsistent with the standard life-cycle model of consumption if retirement is anticipated. We analyze Australian panel data and find that the decline in grocery and f...

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Bibliographic Details
Published in:American journal of agricultural economics 2012-07, Vol.94 (4), p.945-955
Main Authors: Barrett, Garry F., Brzozowski, Matthew
Format: Article
Language:English
Subjects:
Age
Agricultural economics
Australia
Coefficients
Consumer spending
Consumption
Consumption patterns
Consumption Smoothing
Disability retirement
Early retirement
Economic models
Expenditures
Food
Food consumption
Food Expenditure
Household consumption
Household expenditure
Households
Panel data
Retirement
Retirement age
Retirement income
Spouses
Studies
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Summary:International research has shown that household expenditure on nondurables significantly decreases at retirement -a finding that is inconsistent with the standard life-cycle model of consumption if retirement is anticipated. We analyze Australian panel data and find that the decline in grocery and food expenditure is explained by households forced to retire earlier than planned due to a health event or job-loss, which represent unanticipated wealth shocks. For most households retirement is anticipated and there is no decline in basic expenditures. However, for an important minority, retirement is 'involuntary' and these households experience a marked decline across the basic expenditure categories.
ISSN:0002-9092
1467-8276
DOI:10.1093/ajae/aas030