The wealthy hand-to-mouth

Greg Kaplan, Giovanni L. Violante, Justin Weidner

    Research output: Contribution to journalArticlepeer-review


    The “wealthy hand-to-mouth” are households that hold little or no liquid wealth, whether in cash or in checking or savings accounts, despite owning sizable amounts of illiquid assets (assets that carry a transaction cost, such as housing or retirement accounts). We use survey data on household portfolios for the United States, Canada, Australia, the United Kingdom, Germany, France, Italy, and Spain to document the share of such households across countries, their demographic characteristics, the composition of their balance sheets, and the persistence of hand-to-mouth status over their life cycle. The portfolio configuration of the wealthy hand-to-mouth suggests that these households may have a high marginal propensity to consume out of transitory income changes, a prediction for which we find empirical support in PSID data. We explain the implications of this group of consumers for macroeconomic modeling and fiscal policy analysis.

    Original languageEnglish (US)
    Pages (from-to)139-153
    Number of pages15
    JournalBrookings Papers on Economic Activity
    VolumeSpring 2014
    StatePublished - Mar 1 2014

    ASJC Scopus subject areas

    • General Business, Management and Accounting
    • Economics and Econometrics


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