This thesis is a compilation of research on the impacts on subsequent outcomes of key decisions made by young adults. Chapter 2 examines the determinants of the decision to leave home and to work of young adults in Britain. Results show that, for men, parental labour supply is more important than parental income and strong gender differences emerge. For example, unobserved factors are more important for women, while for men parental characteristics are more important. Furthermore, the impacts of the two decisions are more sensitive to age among men than women. The two decisions are jointly determined and should therefore be studied together, but separately for men and women. In Chapter 3 1 investigate the impact of the home leaving age on later life labour market outcomes. Unmeasured parental background and household factors are controlled for through a within-sibling model that compares outcomes between same-sex siblings. I find that exiting the parental home too soon can lead to worse later labour market outcomes. Men with low education have better outcomes on average if they delay leaving home and these estimated effects are larger when controlling for unobserved family effects. Women have better household level income and wealth outcomes if they exit early, which can be attributed to the marriage market. In Chapter 4 J investigate the relationship between higher education and subjective Well-being in the UK. I find that obtaining a degree is associated with lower subjective Well-being. I attribute this negative effect to higher expectations and aspirations of graduates compared to non-graduates. Using a sub-sample of university graduates I show that graduates from prestigious institutions have lower well-being relative to other graduates, which is consistent with the higher expectations and aspirations hypothesis.

Despite being a middle income economy, Mexico typifies the situation of many low-income countries for the nearly 23 million rural Mexicans living in poverty. Rural households in Mexico live in settings characterized by multiple risks which threaten their livelihoods and impact negatively on their welfare. However, they have not responded passively to the deteriorating situation in the countryside and have developed strategies to cope with hardship. The purpose of this research is to investigate the interconnections between this risky environment, the realization of shocks and the risk management and coping mechanisms available to households and its members. Using a mixed methods approach, the thesis combines qualitative and quantitative analysis. Primary data was collected using semi-structured interviews and a survey designed to capture, in detail, issues related to risk, shocks and risk coping strategies. Secondary data from the Mexican Family Life Survey (MxFLS) was used to test for risk sharing across and within households. Overall, our results show that idiosyncratic and covariate shocks have a negative impact on consumption suggesting that insurance is incomplete across and more importantly, within households. However, households and its members use a portfolio of coping strategies depending on the type of shock. Informal mechanisms in the form of savings, borrowing, transfers, and labour supply adjustments play an important role in consumption smoothing. This thesis makes two important contributions. First, it complements the literature on risk and coping strategies by examining the mechanisms for dealing with shocks and their accessibility to the household. Second, empirical evidence on the negative effects of shocks and the effectiveness of risk coping strategies enhances our understanding of the factors that increase vulnerability to poverty of rural households. This information contributes to the design and implementation of social protection programmes to facilitate the identification of those in need and reach the intended beneficiaries.

This thesis examines the impact of house price movements on household financial behaviour using UK individual household-level panel data and microeconometric methods. Three principal essays examine the impact of changes in house prices on i) household saving activity, ii) household indebtedness and iii) transition into self-employment.

Personal finance is developing as an academic discipline, but has some way to go before it is generally accepted as such. The thesis reviews five contributions, from other authors, to the development of personal finance as an academic discipline (dating between 2002 and 2008). Those contributions emphasise the need for a generally agreed body of theory for an academic discipline of personal finance. My publications, in particular Personal Finance and Investments: A Behavioural Finance Perspective, have sought to establish a body of theory and knowledge for an academic discipline of personal finance. That body of theory and knowledge is multidisciplinary, and much broader than the bodies of theory suggested by the five previous contributions. It is also much broader, and based more on academic research, than the curricula of professional bodies such as the Chartered Insurance Institute (which reflects the curriculum set out by the Financial Services Authority) for the training of financial advisers. The greater breadth is illustrated by means of comparisons of threshold concepts covered by my publications with those covered by the previous five contributions, and by professional training programmes. Consideration of the objectives and processes of personal financial advice suggests that an academic curriculum should be more multidisciplinary than the existing curricula of professional bodies. In particular the curriculum should include behavioural and relationship dimensions. It is suggested that attention to the psychology of clients should be included in the education and training of financial advisers. This could take the form of using behavioural finance to gain insights into how clients might perceive financial products and services. Some of my publications being considered here (those published in the Journal of Financial Planning and the Journal of Financial Service Professionals) provide behavioural finance perspectives on client perceptions of financial products and financial advice (and their providers). Incorporation of behavioural dimensions 6 into the education and training of financial advisers would help to develop a subjectivist1 dimension to their analyses of client financial problems. Existing professional training programmes focus on objectivist2 factors such as portfolio management and regulatory issues. There is a need to incorporate a subjectivist, client focused, dimension. Behavioural perspectives on financial products, financial advice, and the providers of financial services are not my only contribution through the medium of refereed academic journals. Another aspect of the proposed curriculum has been addressed through that medium, namely time diversification. Time diversification, that leads to the relative risk of stocks declining as the investment horizon extends, was shown to be dependent on the rate of investment growth and the level of stock return volatility. The approach entailed computer simulation based on the Black-Scholes option pricing model. Implications for personal financial advice, and for behavioural perspectives, were drawn.

Research in consumer financial decision making has received considerable attention in recent years. This thesis contributes to the literature on financial literacy and measuring underlying behavioural characteristics to explain individual choice, as well as the experimental literature on the certainty effect and robustness of experimental results. The thesis is separated into three substantive chapters. The first two substantive chapters use individual level survey data of a representative sample of UK households to investigate the role of financial literacy and behavioural traits in (i) the simultaneous holding of consumer credit and liquid savings, i.e. the `co-holding puzzle', and (ii) mortgage choice. My results show that underlying individual traits are important predictors for consumer choice. Households with self-control issues are significantly more likely to co-hold substantial amounts, consistent with the notion that co-holding is a form of self-control management to limit consumption. My results also show that individuals with low levels of financial literacy and an impulsive present bias for consumption are significantly more likely to hold alternative, non-amortising, mortgage products. This suggests that these mortgages may attract consumers who are less likely to sufficiently understand their features, and who put more weight on present consumption. The third substantive chapter reports and discusses evidence from two experimental studies, motivated by evidence that people may prefer simple and/or certain options disproportionally. The first study investigates the certainty effect using a new laboratory design that goes beyond the pairwise-lottery choices typically used in the literature. The results provide little evidence of a certainty effect in this setting, where subjects can choose from eleven options. In the second study, I attempt to replicate the results of the original experiment that suggests that people are significantly more likely to prefer simple options when faced with larger choice sets. I follow the procedure of the original design, but my results provide no evidence for a disproportionate preference for simplicity. Instead, subjects choose according to their risk attitude.

In this thesis I contribute to the applied study of households' consumption and saving behaviour. In the first chapter I introduce and explain why it is relevant to understand how households react to income shocks in terms of their consumption and saving decisions. The second chapter is inspired by a recent paper by Krueger and Perri (2011), who argue that the observed response of household wealth to income shocks, which is smaller over long periods, provides evidence in favour of the classic permanent-income model with perfect financial markets. Whether a model with financial market imperfections, however, such as the standard incomplete-markets model with liquidity constraints, can also generate such a wealth response crucially depends on the importance of precautionary wealth accumulation. I structurally estimate a model with a precautionary- savings motive and show that it can generate the observed wealth responses in the data. I further show that the wealth responses to income shocks do not allow us to rule out financial market imperfections. In the third chapter I extend the analysis, studying empirically what can be learned from international evidence on the way in which households react to income. I use detailed panel data from newly available surveys of Chile, Spain and the United States. Although it compares three different countries with dissimilar levels of development in their financial markets, the evidence suggests that the amount of precautionary savings in these economies is low and that household behaviour is not strongly influenced by the presence of borrowing constraints. The structural estimation for all countries suggests a low target level of wealth resulting from high levels of impatience or low levels of risk aversion. In the fourth chapter I extend the analysis to the real estate properties owned by the households. I revisit the Italian data, building on Kaplan and Violante (2014) who have argued that a substantial fraction of wealthy households with illiquid wealth, such as real estate, behave as hand-to-mouth consumers. In exploring the data, I find that, in the Italian sample, households which adjust their illiquid wealth show responses to income shocks like permanent-income consumers. Instead households which do not adjust their illiquid wealth, and whose behaviour in general can thus not be characterised by the first order conditions, show responses to income shocks which suggest a stronger precautionary-saving motive, such as wealthy hand-to-mouth consumers might be expected to show. The fifth chapter provides the conclusions of the thesis.

No description available.

In the 1950s and 1960s, after gaining independence from their colonial powers, most developing countries adopted “market substitution” as their policy for economic development and growth. In essence, this was an industrialisation strategy followed by these developing economies to concentrate on home-grown products and nurture their expertise in order to reach the status of industrialised nations. However, by the end of 1970s, many developing countries began to realize the failures of their inward-looking approach to industrialization when their economies were mired with high unemployment, inflation and chronic external debt. By the middle of 1980s, many of these countries began to change their policies and reorient themselves into market economies. However, with financial crises and economic recessions that resulted from pursuing market driven liberalization policies, these economies began to realize the flaws of the market driven approach to industrialization. Nevertheless, they continued with the liberalised policies incorporating market as well as non-market (institutional) reforms, aimed at strengthening regulation, improving corporate governance and curbing corruption to avoid the destabilising consequences of financial liberalization. The evolving economic policies that influenced financial development and growth in developing economies came about with the objective of enhancing household and private sector‘s savings. These policies have been designed to influence financial development and economic growth (which can impact upon private savings) in two different ways: (i) by increasing saving due to households taking precautionary motives, or (ii) negatively by spending more due to increase in overall expenditures. Theoretically, the combined effect on private saving is therefore ambiguous. The purpose of this thesis is to assess empirically the importance of various economic factors influencing private sector savings in emerging market economies. In addition, the influence of non-market institutional factors on savings is explored from the incorporation of newly institutional measures into these countries economic policies. Several econometric methodologies are employed with empirical analysis conducted on data for twenty emerging economies across three primary regions in the world, i.e. Asia Pacific, Middle East and North African (MENA), and South America. The twenty countries also include other emerging economies that are proximate to MENA regions such as South Africa, Turkey and Israel. In general, the findings based on SUR (Seemingly Unrelated Regression) methodology show that per capita growth, financial development, government savings, and trade openness have a positive impact on private savings; while youth and old dependency-age groups, real interest rate, and urban growth have a negative effect on private savings. In general, most of these results are consistent with previous studies for other countries. Additionally, causality tests are conducted using Vector Autoregressive (VAR) methodology as well as Pedroni and Johansen cointegration methods within the Vector Error Correction (VEC) model to determine both short-term and long-term causality effects between financial development and economic growth. The results indicate that in the long run financial development has a causal effect on growth; however, in the short run the results are quite mixed. For example, the short run result using the VAR method shows that income growth has Granger causality effect on financial development, but the F-test result for the VEC method shows evidence of bivariate causality. The long-term causality results also confirm the finding of previous research about the importance of developing financial sector in order to spur the country‘s economic growth. The final empirical investigation is to conduct panel data regression to test the impact of non-market institutions on private savings. The main result here is that sound institutional factors based on respect for property rights (e.g. bureaucracy, accountability and regulation quality) have a positive effect on aggregate private savings. Furthermore, political stability is found to have a negative impact on savings while efficient bureaucracy has a positive impact on savings. It can be construed that with an uncertain political environment, i.e. diminishing political stability, the public in general would save more than spend. On the other hand, efficient bureaucracy would boost public confidence about the country‘s governance, which can lead to increased overall savings by the public.

There are four parts to this thesis: the first chapter analyses the structure of leisure in couples with particular emphasis on joint leisure. We take a structural approach and model the household as a two-stage decision making unit. The findings suggest that couples see joint leisure as a distinct good from private leisure. Specifically when a household decides to have more leisure, almost 40 percent of this increase is allocated to joint leisure as opposed to only 8 to 15 percent allocated to male private leisure. Furthermore, couples prefer to spend leisure together (synchronisation) relative to spending time independently, giving joint leisure the largest weight in the utility function. The findings further suggest that demographics can play a large role in determining the patterns of spousal leisure, with ethnicity and job characteristics being important factors. Finally, when analysing weekend time use patterns, there is evidence to suggest that Saturdays should be distinguished from Sundays as approximately 41 percent more joint leisure is observed on Sundays. The second chapter of the thesis begins our examination of the UK income taxation reform in 1990. The UK went from a system of joint taxation to independent taxation of couples and this reform may have had important implications for households. Across countries, there is a large variation in the income tax treatment of couples. Over the last three decades, many countries have undergone reforms in their tax systems, some have moved from joint to independent taxation, some from independent to joint, while others have begun the practice of allowing couples to choose the system they prefer. This chapter aims to give an overview of the tax treatment of couples and outlines the differences across countries, with particular emphasis on the tax reform in the UK. The third chapter investigates the UK income taxation reform in 1990 and examines how the change from a system of joint to independent taxation of couples has shifted women's relative earning potentials in the household, and how this in turn has led to changes in intra-household assignable clothing expenditures. I apply my method to a sample of UK couples with children and the findings of this chapter show that an exogenous increase in women's income relative to their spouse significantly and substantially increases female clothing expenditure and decreases male clothing expenditure ceteris paribus. However an increase in relative female earnings does not necessarily mean that children will do better relatively. The final outcome may depend on the type of transfer in question. In addition, there is evidence that the final allocations of expenditures on each partner and children may depend significantly on distribution factors such as spousal relative incomes, age gap and educational gap, despite the fact that these variables do not impact on preferences nor on budgets directly. This provides further evidence against the unitary framework in favour of the collective approach and the sharing rule interpretation of how households make decisions in practice. The final chapter of this thesis examines the effects of the tax reform in 1990 with particular emphasis on female labour supply. A method of clarifying the concept of a spouse's individual net income under a joint tax regime is proposed and following the methodology of Blundell et al (2007), the labour supply elasticities for both male and female are estimated. The analysis is extended further to include children in the model and the results show that both the number of children and their age are highly significant for women's labour supply and to a smaller extent also for men. Testing the income pooling hypothesis, the unitary model is not rejected. However, the results strongly reject the hypothesis that distribution factors have no effect on labour supply. The results also suggest that for the group of women affected, the reform generated two opposing effects on their labour supply: a positive effect from an increase in net wage and a negative effect from an increase in bargaining power. On balance, we find that a typical female decreased her labour supply by approximately 2.6 hours per week, yet she still experienced a 22 percent increase in her net income.

La liberté de gérer son patrimoine résulte de l’exercice du droit de propriété, des libertés économiques et de la liberté contractuelle. Cette liberté n’est pas reconnue en droit positif. Pourtant, en pratique, elle fait l’objet d’un exercice implicite par chaque propriétaire au point que la question de sa consécration peut légitimement être posée. La liberté de gérer son patrimoine comporte deux composantes distinctes : la « gestion-valorisation » et la « gestion-transmission ». La première est constituée par l’ensemble des actes visant à valoriser son patrimoine par l’augmentation de l’actif net. La seconde regroupe l’ensemble des actes visant à valoriser le patrimoine d’autrui par la transmission de ses biens de son vivant ou à cause de mort.Notre environnement juridique offre à la « gestion-valorisation » un très fort épanouissement qui s’exprime par une multitude d’actes de gestion patrimoniale. Le recours aux patrimoines d’affectation, aux propriétés collectives ou encore aux personnes morales en est la plus parfaite illustration. Pour autant, l’approche de la « gestion-transmission » est bien différente. S’il est clair que son organisation est le fruit d’une grande liberté octroyée au propriétaire, tel n’est pas le cas du choix de ses bénéficiaires. En effet, la réserve héréditaire, contestable dans ses principes, apparaît comme un frein à la libre « gestion-transmission », de sorte qu’elle devrait sans doute être assouplie, voire supprimée.C’est donc en s’inscrivant dans un libéralisme modéré que la liberté de gérer son patrimoine pourrait servir de nouveau fondement à certaines réformes s’imposant à notre droit. / The freedom to administer one's inheritance derives from the practice of the laws of ownership, and of economic and contractual liberties. This freedom is not recognized as a positive right. However, in practice, it is the object of an implicit practice by each property owner to the extent that the matter of its administration can be legitimately formulated.The freedom to administer one's inheritance is composed of two distinct components : either an « enhanced value management » or a « transmission management ». The first consists of the totality of the deeds aiming to enhance the value of the inheritance by the increase of the disposable assets. The second reconstitutes the totality of the deeds aiming to enhance the inheritance of others, either alive or dead, by the transmission of their possessions. Our judicial environment offers a large expansion of the « enhanced value management », which is expressed in a multitude of inheritance management deeds. The most perfect illustration of this lies in one's having recourse to inheritance allocation, to collective properties or, still, to ethical individuals. Moreover, the « transmission management » approach is very different. If it is clear that its administration results from the broad freedom granted to the property owner, such is not the case in the choice of his beneficiaries. In fact, that part of the legacy which cannot be withheld from the rightful heirs, be it disputable in its principles, acts as a brake to the implementation of the « transmission management », so that it should be amended, or even suppressed. It is therefore by subscribing to a more moderate liberalism that the freedom to administer one's own inheritance could serve as a new foundation to certain reforms which are vital to our rights.