Age, Retirement, and Expenditure Patterns: An Econometric Study of Older Households

The paper explores the allocation of consumption expenditure by the older population among different categories of goods and services, and how expenditure patterns change with age within that population. Of particular interest is whether observed differences between pre-retirement and post-retirement patterns are a consequence of changes in tastes or reductions in income. An adapted form of the Deaton and Muellbauer [Am. Econ. Rev., 70:312–326, 1980] Almost Ideal Demand System (AIDS) is estimated with data from six surveys of family expenditure and used to investigate that question. The findings suggest that observed changes in budget allocations are most closely related to reductions in income.