Modigliani life cycle hypothesis

[pdavidso <pdavidso@xxxxxxx>]

>===== Original Message From Barkley Rosser <rosserjb@xxxxxxx> =====
>Paul,
> That is an unfortunately underappreciated
>paper, and I am closely acquainted with some
>of its authors. It does need more publicizing.

>Therefore, if the savings rate is
>in general declining, which it has been for some
>time in the US, it is not surprising that older people
>tend to have higher savings rates.

The life cycle hypothesis is ceteris paribus -- i.e., independent of the
aggregate average savings rate.

They might
>have had still higher ones when younger.



This is again irrelevant -- since the study compares 65 year olds --with 70
year olds with 75 year olds etc., and the older one is in the sample the more
the average saviong rate --CETERIS PARIBUS i.e., after afjusting for all
socioeconomic characteristics. Hence the life-cycle hypothesis is
incvompatible with this empirical evidence--

And isn't it Popper that noted if one finds one black swan, then one has
falsified the hypothesis that all swans are white?
Also,
>there may be a selection effect, those who save
>more live longer. This would also bias the results.


Again this is not possiblebecause the 75 year olds in the sample (if the
sampling design was correct) saved less when they were 70 year olds, etc.


Of course one can always say there was something wrong with the sampling date
-- or if that fails-- argue that there was a type II error in this particular
case --- but I offered Franco any publication space he wanted to respond to
this study and he declined.

Paul

Paul Davidson
Editor, Journal of Post Keynesian Economics
University of Tennessee
SMC 503
Knoxville, Tennessee 37996-0550
office phone #;(865)974-4221; office fax# (865)974-1686 or (865)974-4601
home phone and fax # (865)

Paul Davidson
Editor, Journal of Post Keynesian Economics
University of Tennessee
SMC 503
Knoxville, Tennessee 37996-0550
office phone #;(865)974-4221; office fax# (865)974-1686 or (865)974-4601
home phone and fax # (865)692-0802
email pdavidson@xxxxxxx
http://econ.bus.utk.edu/davidsonextra/Davidson.html