Decomposing Consumer Wealth Effects: Evidence on the Role of Real Estate Assets Following the Wealth Cycle of 1990-2002

During the period of 1990-2002 US households experienced a dramatic wealth cycle, induced by a 369% appreciation in the value of real per capita liquid stock market assets followed by a 55% decline. However, consumer spending in real terms continued to rise throughout this period. Using data from 1990-2005, traditional life-cycle approaches to estimating macroeconomic wealth effects confront two puzzles: (i) econometric evidence of a stable cointegrating relationship among consumption, income, and wealth is weak at best; and (ii) life-cycle models that rely on aggregate measures of wealth cannot explain why consumption did not collapse when the value of stock market assets declined so dramatically. We address both puzzles by decomposing wealth according to the liquidity of household assets. We find that the significant appreciation in the value of real estate assets that occurred after the peak of the wealth cycle helped sustain consumer spending from 2001 to 2005.

Stock Markets and Household Wealth: Can a Stock Market Crash Cause a Recession in The U.S. Economy?

Stock market wealth effects on the level of consumption in the United States economy have been constantly debated; there is evidence for arguments for and against its prominence and its symmetry. This paper seeks to investigate the strength of its negative effect by creating models to analyze unexpected shocks to the Standard and Poor's 500 index. First, a transmission mechanism between the stock market and GDP is established through the use of second-order vector autoregressive models. Following which, theory from the life cycle model and adaptations of previous researchers' models are used to create a structural model. This paper finds that stock market wealth effects are small, but important to consider, especially if markets are overpriced; this claim is corroborated by evidence from simulation of 'alternative scenarios' and the historical experiences of 1987 and 2001.

Religion and Subjective Well-Being Among China’s Elderly Population

Evidence from developed and developing countries alike demonstrates a strongly positive relationship between religiosity and happiness, particularly for women and particularly among the elderly. Using survey data from the oldest old in China, we find a strong negative relationship between religious participation and subjective well-being in a rich multivariate logistic framework that controls for demographics, health and disabilities, living arrangements and marital status, wealth and income, lifestyle and social networks, and location. In contrast to other studies, we also find that religion has a larger effect on subjective well-being on men than women.

Money and Education: How Economic Distribution Corresponds to Academic Success

Urban sprawl is a significant issue in the United States, one effect of which is the departure of the wealth from cities. This study examined the distribution of wealth in Erie County, New York, focused around Buffalo. The question is then raised, why do those with the money leave the city, and to where do they go? While this study does not attempt to explain all of the reasons, it does examine two significant issues: quality of public school education, and proximity to main highways with easy access to the city. Using ArcGIS, I was able to place the public high schools and their relative ranking over a distribution of per capita income. The results of this analysis show that the wealthiest areas are located within the best school districts. Moreover, the areas where the wealth accumulates are directly connected by major highways.