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ARBITRAGE BETWEEN CONSUMPTION AND SAVING FOR BEQUEST: THE ROLE OF SUBJECTIVE EXPECTED SURVIVAL AND SATISFACTION WITH THE QUALITY OF LIFE, SOUTH KOREA 2008–2014

Published online by Cambridge University Press:  04 September 2019

Noël Bonneuil  and
Younga Kim
Noël Bonneuil
Affiliation:
Institut national d’études démographiques, 133, bld Davout, 75980, Paris cedex 20, France and École des hautes études en sciences sociales, France
Younga Kim*
Affiliation:
Korea Labor Institute, 622, C Bldg, Sejong National Research Complex 370, Sicheong-daero, Sejong-si, 30147 South Korea
*
Address correspondence to: Younga Kim, Korea Labor Institute, 622, C Bldg, Sejong National Research Complex 370, Sicheong-daero, Sejong-si, 30147, South Korea. e-mail: youngakim@ymail.com. Phone: 32 (0)10 47 41 80.
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Abstract

Arbitrage between consumption and saving occurs in a context of an aging society where family solidarity is deteriorating. Maximizing inter-temporal utility makes it possible to calculate the preference for saving. The arbitrage involves subjective satisfaction with the quality of life, anticipated survival, and consumption profiles. Simultaneous equations based on the Korean Longitudinal Study on Aging, 2006–2014 (10,205 adults aged 45 and over) show that the preference for saving is determined only by and through these endogenous variables, with no other direct socioeconomic effects. People spending more money in education are those with the highest preference for saving. Socioeconomic variables influence the preference for saving in agreement to the economic theory of the life cycle, but through the structured filter of endogenous subjective variables and consumption profiles.

Keywords

Life Cycle HypothesisSubjectivityPreferencesConsumption ProfilesBequest
Type
Articles
Information
Macroeconomic Dynamics , Volume 25 , Issue 4 , June 2021 , pp. 998 - 1019
Copyright
© Cambridge University Press 2019

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Footnotes

Dr Younga Kim for this study was supported by the “MOVE-IN Louvain” project of Université catholique de Louvain, co-funded by the Marie Curie Actions of the European Commission.

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