Time is money: Rational life cycle inertia and the delegation of investment management

• 成果类型: Article
• 署名作者: Kim, Hugh Hoikwang; Maurer, Raimond; Mitchell, Olivia S.
• 署名单位: University of South Carolina System; University of South Carolina Columbia; Goethe University Frankfurt; University of Pennsylvania; National Bureau of Economic Research
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2016.03.008
• 发表日期: 2016
• 页码: 427-447
• 关键词: Portfolio inertia; Life cycle saving; household finance; human capital; FINANCIAL ADVICE

摘要

Many households display inertia in investment management over their life cycles. Our calibrated dynamic life cycle portfolio choice model can account for such an apparently 'irrational' outcome, by incorporating the fact that investors must forgo acquiring job-specific skills when they spend time managing their money, and their efficiency in financial decision making varies with age. Resulting inertia patterns mesh well with findings from prior studies and our own empirical results from Panel Study of Income Dynamics (PSID) data. We also analyze how people optimally choose between actively managing their assets versus delegating the task to financial advisors. Delegation proves valuable to both the young and the old. Our calibrated model quantifies welfare gains from including investment time and money costs as well as delegation in a life cycle setting. (C) 2016 Elsevier B.V. All rights reserved.