Incentives, Insurance, and the Variability of Consumption and Leisure

Authors

  • Christopher Phelan University of Wisconsin-Madison

DOI:

https://doi.org/10.1016/1057-0810(95)90022-5

Abstract

This paper considers to what extent dynamic incentive models such as Green (1987), Phelan and Townsend (199 l), and Atkeson and Lucas (1992) can quantitatively explain why some individuals consume (or work) more than others and why a typical individual’s consumption (or leisure) varies over time. A simple repeated agency model is shown to be able to better match several population moments concerning life-cycle labor supply and consumption variation than the same model without incentive constraints. On the other hand, I show for the standard stylized models of repeated agency, incentive-induced variability is an insufficient explanation of the variability in the data. Journal of Economic Dynamics and Control, May/July 1994, 18(3/4): 581-599. (Reprinted with permission of North-Holland Publishing Company.)

Published

1995-06-30

How to Cite

Phelan , C. (1995). Incentives, Insurance, and the Variability of Consumption and Leisure. Financial Services Review, 4(1), 62. https://doi.org/10.1016/1057-0810(95)90022-5

Issue

Section

Abstracts of Articles on Individual Financial Management