TY  - JOUR
AU  - Ameriks,John
AU  - Caplin,Andrew
AU  - Leahy,John
TI  - Wealth Accumulation and the Propensity to Plan
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8920
PY  - 2002
Y2  - May 2002
UR  - http://www.nber.org/papers/w8920
L1  - http://www.nber.org/papers/w8920.pdf
N1  - Author contact info:
John Ameriks
John Ameriks
The Vanguard Group, Inc.
PO Box 2600, MS V36
Valley Forge PA 19482
Tel: 610-503-5676
Fax: 610-503-5690
E-Mail: john_ameriks@vanguard.com

Andrew Caplin
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/998-8950
Fax: 212/995-3932
E-Mail: andrew.caplin@nyu.edu

John V. Leahy
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/992-9770
E-Mail: john.leahy@nyu.edu
AB  - 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 effort is associated with increased wealth. The propensity to plan is uncorrelated with survey measures of the discount factor and the bequest motive, raising a question as to why it is associated with wealth accumulation. Part of the answer lies in the very strong relationship we uncover between the propensity to plan and how carefully households monitor their spending. It appears that this detailed monitoring activity helps households to save more and to accumulate more wealth.
ER  -