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Enhancing Wealth & Labor Supply Parameters Study

Refine & analyze IES, time/risk preferences. Improve output delivery. Measure parameters like labor supply elasticities, retirement elasticity. Address income & substitution effects. Explore dose-response mapping. Conduct web surveys for habit formation. Test happiness measures for survey efficiency.

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Enhancing Wealth & Labor Supply Parameters Study

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  1. Extensions / Renewal (Kimball, Sahm, Shapiro) • Refine and analyze data on IES, time preference, and risk tolerance • Improve instrument and output delivery • Estimate statistical model • Measure complementary parameters • Diminishing marginal utility • Labor supply elasticities • Retirement elasticity

  2. Renewal: Survey Measurement of Preference Parameters (KSS) 2 Big HRS Topics: Wealth, Labor Supply • Preference parameters for wealth • risk tolerance • time preference/intertemporal substitution • bequest motive (intergenerational altruism) • Preference parameters for labor supply • income, substitution, and long-run labor supply elasticities, • retirement elasticities

  3. Scientific Significance 1. Kimball-Shapiro finding of large income elasticities of labor supply on HRS data raises many questions • Are substitution elasticities, measured directly, also large? • Is the long-run labor supply elasticity, in fact, zero? • What is the dose-response mapping? • How large is the retirement elasticity?

  4. Scientific Significance (cont.) 2. Labor supply elasticities are linked to the elasticities that matter for wealth • Raj Chetty links risk aversion to the long-run labor supply elasticity • Basu and Kimball emphasize the link between the long-run labor supply elasticity and intertemporal substitution. 3. The elasticities that matter for wealth are theoretically linked to one another (U’’).

  5. Proposal for KSS piece of the Renewal • Continue to develop web-based measures of time-preference/intertemporal substitution, including ways of getting at habit formation. • Compare time-preference/intertemporal substitution measures to other measures related to U’’ and to labor supply elasticity measures. • Measure the retirement elasticity, test dose-response relationships for labor supply and compare measures of income, substitution and long-run elasticities (yielding over-identification)

  6. Happiness (KW) • Add a simple happiness measure to the web survey • inexpensive: ≈40 seconds of survey time • extends the SCA panel data on happiness • relevant to other data on the web survey • Comparisons of hypothetical choices with predicted impact effects on happiness • Test of theoretical prediction • Valuable survey method for some choices?

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