@techreport{NBERw10098, title = "Grasshoppers, Ants, and Pre-
Retirement Wealth: A Test of Permanent Income", author = "Erik
Hurst", institution = "National Bureau of Economic Research",
type = "Working Paper", series = "Working Paper Series", number
= "10098", year = "2003", month = "November", URL =
"http://www.nber.org/papers/w10098", abstract = {This paper
shows that households who enter retirement with low wealth
consistently followed non-permanent income consumption rules
during their working years. Using the Panel Study of Income
Dynamics (PSID), household wealth in 1989 is predicted for a
sample of 50-65 year olds using both current and past income,
occupation, demographic, employment, and health characteristics.
Using the residuals from this first stage regression, the sample
of pre-retired households is subsetted into households who save
'lower' than predicted and all other households. The panel
component of the PSID is then used to analyze the consumption
behavior of these households early in their