Wealth accumulation and the propensity to plan

John Ameriks, Andrew Caplin, John Leahy

    Research output: Contribution to journalReview articlepeer-review


    Why do similar households end up with very different levels of wealth? We show that differences in the attitudes and skills with which they approach financial planning are a significant factor. We use new and unique survey data to assess these differences and to measure each household's "propensity to plan." We show that those with a higher such propensity spend more time developing financial plans, and that this shift in planning is associated with increased wealth. These findings are consistent with broad psychological evidence concerning the beneficial impacts of planning on goal pursuit. Those with a high propensity to plan may be better able to control their spending, and thereby achieve their goal of wealth accumulation. We find direct evidence supporting this effortful self-control channel in the very strong relationship we uncover between the propensity to plan and budgeting behavior.

    Original languageEnglish (US)
    Pages (from-to)1007-1047
    Number of pages41
    JournalQuarterly Journal of Economics
    Issue number3
    StatePublished - Aug 2003

    ASJC Scopus subject areas

    • Economics and Econometrics


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