How Aging Has Affected Total Consumption Expenditures in Finland?
37 Pages Posted: 18 Apr 2007
Date Written: April 18, 2007
We study how the age and the year of birth (cohort) have affected total consumption expenditures. Especially we focus on how this evident dependence of the age and the consumption expenditures has changed over generations. If so, how can these changes in consumption patterns be modelled? The data set includes five independent cross-sections of Finnish Household Surveys in 1985, 1990, 1994-1996, 1998 and 2001. A slowly changing dependence between the age and the total consumption expenditures of the households appears. A new method is developed to model the phenomenon. Our new method allows modelling this slowly changing dependence both accurately and interestingly. Our main result concerns the birth cohort 1945-65 whose age is now between 41 and 62. Even without an economic growth their households would probably consume more when they get old compared to the previous generation when they were about equally old. The difference in their consumption patterns is statistically significant at all reasonable risk levels. This would mean an essential quality change in consumption during the forthcoming 10-20 years.
Keywords: Modelling, Aging, Consumption, Smoothing
JEL Classification: C5, E21, C14
Suggested Citation: Suggested Citation