Windfall income shocks with finite planning horizons

• 成果类型: Article
• 署名作者: Boutros, Michael
• 署名单位: University of Toronto
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2025.104174
• 发表日期: 2026-02
• 页码: 104174
• 关键词: Household decisionmaking; Financial planning; bounded rationality; Mental accounting; marginal propensity to consume; consumption; sensitivity; POLICY

摘要

I study how the cognitive demands of financial planning shape household decisionmaking with respect to consumption out of windfall income shocks. I build a quantitative model of bounded rationality in which reoptimization is costly. Households respond to windfall income shocks by choosing a finite planning horizon over which to reoptimize, and the optimal planning horizon is increasing in wealth and the magnitude of the income shock. Calibrated to U.S. data, the model's distribution of consumption responses is consistent with three key facts: even highly liquid households have large consumption responses out of income shocks, the fraction of households with positive consumption responses increases with shock size, and conditional on responding, larger shocks generate smaller consumption responses.