Modigliani life cycle hypothesis

[pdavidso <pdavidso@xxxxxxx>]

>===== Original Message From Warren Mosler <mosler@xxxxxxxxxxxxxx> =====
>Ironically, he is of course correct in real terms-
>real savings is only the result of actual
>employment/production, etc. So one doesn't save in
>real terms, but only consumes, until one goes to work,
>and when one retires one only consumes as well.


Not correct at all in real terms or money terms or any other terms.
Modigliani's thesis involves savings behavior of households -- so children are
included in consumtpion by the age of the head of the household.

Also retired folks have income from social security, pensions, interest from
previous savings and investments etc. and the University of Wisconsin's
Poverty Institute Study of over 9000 households indicated that the average
propensity to save increases with age -- so that OUT OF ANY GIVEN LEVEL OF
INCOME, 70 year old head of households spend less out of their income than 65
year olds, etc.

pAUL