Economic Development, Life-Cycle Consumption and Planning Hirizon

Abstract

This article presents estimates of consumer planning horizons for countries at different levels of economic development. Within an intertemporal optimization framework a direct relationship is observed between the length of consumers' planning horizons and the level of economic development. In particular, consumption behavior in a sample of developed economies reflect longer planning horizons than in the sample of less developed economics. The average planning horizon for a group of less developed economies is about 7 months, while it is 1.6 and 3.8 years for middle and high income economies, respectively. [E21, O50]

^* We wish to thank an anomymous referre for several valuables suggestions. Helpful comments were also provided by Cherl Asher and other participants of the development section at the Atlantic Economic Association conference in Philadelphia. Our thanks go to Richard Betts of Penn State for his comments on an earlier version of the paper. We also appreciative of Claire Kreider for her efforts in compiling the data. Errors remaining are our sole responsibility.

^* We wish to thank an anomymous referre for several valuables suggestions. Helpful comments were also provided by Cherl Asher and other participants of the development section at the Atlantic Economic Association conference in Philadelphia. Our thanks go to Richard Betts of Penn State for his comments on an earlier version of the paper. We also appreciative of Claire Kreider for her efforts in compiling the data. Errors remaining are our sole responsibility.

Notes

^* We wish to thank an anomymous referre for several valuables suggestions. Helpful comments were also provided by Cherl Asher and other participants of the development section at the Atlantic Economic Association conference in Philadelphia. Our thanks go to Richard Betts of Penn State for his comments on an earlier version of the paper. We also appreciative of Claire Kreider for her efforts in compiling the data. Errors remaining are our sole responsibility.