No abstract

The importance of investment portfolio allocation has become more apparent since the onset of the late 2000s Great Recession. Individual willingness to take financial risks affects portfolio decisions and investment returns among other factors. Previous research found that people of different ages have dissimilar levels of risk tolerance but the effects of generation, period, and aging were confounded. Using the 1998 to 2007 Survey of Consumer Finances crosssectional datasets, this study uses an analytical method to separate such effects on financial risk tolerance. Aging and period effects on financial risk tolerance were statistically significant.

The purpose of this research is to explore gender differences in financial risk tolerance using a large, nationally representative dataset, the Survey of Consumer Finances. The impact of the explanatory variables in the model is allowed to differ between men and women to decompose gender differences in financial risk tolerance. The results indicate that gender differences in financial risk tolerance are explained by gender differences in the individual determinants of financial risk tolerance, and that the disparity does not result from gender in and of itself. The individual variables that moderate the relationship between gender and high risk tolerance are income uncertainty and net worth, with income uncertainty moderating the relationship between gender and some risk tolerance. Financial fiduciaries should understand the differences in income uncertainty and net worth between men and women and how those differences relate to risk tolerance.

We develop a life-cycle model to study the effects of house price changes on household consumption and welfare. The model explicitly incorporates the dual feature of housing as both a consumption good and an investment asset and allows for costly adjustments in housing and mortgage positions. Our analysis indicates that although house price changes have small aggregate effects, their consumption and welfare consequences on individual households vary significantly. In particular, the non-housing consumption of young and old homeowners is much more sensitive to house price changes than that of middle-aged homeowners. More importantly, while house price appreciation increases the net worth and consumption of all homeowners, it only improves the welfare of middleaged and old homeowners. Young homeowners and renters are worse off due to higher life-cycle housing consumption costs.

We develop a life-cycle model to study the effects of house price changes on household consumption and welfare. The model explicitly incorporates the dual feature of housing as both a consumption good and an investment asset and allows for costly adjustments in housing and mortgage positions. Our analysis indicates that although house price changes have small aggregate effects, their consumption and welfare consequences on individual households vary significantly. In particular, the non-housing consumption of young and old homeowners is much more sensitive to house price changes than that of middle-aged homeowners. More importantly, while house price appreciation increases the net worth and consumption of all homeowners, it only improves the welfare of middleaged and old homeowners. Young homeowners and renters are worse off due to higher life-cycle housing consumption costs.

This article examines the factors driving the borrower's decision to terminate commercial mortgage contracts with the lender through either prepayment or default. Using loan-level data, we estimate prepayment and default functions in a proportional hazard framework with competing risks, allowing us to account for unobserved heterogeneity. Under a strict definition of mortgage default, we do not find evidence to support the existence of unobserved heterogeneity. However, when the definition of mortgage default is relaxed, we do find some evidence of two distinctive borrower groups. Our results suggest that the values of implicit put and call options drive default and prepayment actions in a nonlinear and interactive fashion. Prepayment and default risks are found to be convex in the intrinsic value of call and put options, respectively. Consistent with the joint nature of the two underlying options, high value of the put/call option is found to significantly reduce the call/put risk since the borrower forfeits both options by exercising one. Variables that proxy for cash flow and credit conditions as well as "ex post" bargaining powers are also found to have significant influence upon the borrower's mortgage termination decision. Copyright 2002 American Real Estate and Urban Economics Association.

We develop a life-cycle model that explicitly incorporates the dual feature of housing as both a consumption good and an investment asset. Our analysis indicates that the consumption and welfare consequences of house price changes on individual households vary significantly. In particular, the non-housing consumption of young and old homeowners is much more sensitive to house price changes than that of middle-aged homeowners. More importantly, while house price appreciation increases the net worth and consumption of all homeowners, it only improves the welfare of old homeowners. Renters and young homeowners are worse off due to higher lifetime housing consumption costs. Copyright 2007 The Ohio State University.

PurposeThe purpose of this study was to examine family structure differences in debt types and burdens of American families.Design/methodology/approachData was from the 2016 Survey of Consumer Finances. Eight types of family structures, five specific debts, and two debt burden indicators are examined with multivariate logistic regressions.FindingsAfter controlling for several socioeconomic variables, multivariate logistic regression results show that married with children families are more likely than five other family types to have any debt. In terms of specific debt, married with children families are more likely than six other types of families to have mortgages, four other types to have credit card loans, five other types to have to vehicle loans, three other types to have education loans, and one other type to have purchase loans. Married with children families are more likely than three other types of families (childless married couples, single males, and single females) to be late in debt payment for 60 or more days.Research limitations/implicationsThe data is limited to one-year cross-sectional data. To gain more insights on this topic, panel data could be used.Practical implicationsThe findings can be used for financial service professionals to identify loan demand and risk associated with various family structures and develop effective marketing strategies to serve these clients.Social implicationsThe findings are informative for public policymakers to develop family friendly economic policies and for consumer educators who help consumers make effective financial decisions when borrowing various types of loans.Originality/valueFirst, this study uses an innovative definition of family structure that counts several nontraditional family structures. Second, this study examines family structure differences in holdings of five specific debts together.