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Pension Expectations and Household Portfolio Choice of the Elderly in Japan

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  • Okumura, Tsunao
  • Usui, Emiko

Abstract

Using the Japanese Study of Aging and Retirement (JSTAR), we examine the determinants of household portfolio choice by the elderly in Japan. Only one-fifth of Japanese elderly hold stocks among their financial assets. Japanese elderly who are more educated, have better mental functions, have higher income, and subjectively expect a greater probability of living until at least age 80 are more likely to hold stocks. Among those who plan to receive public pension benefits in the future, those who expect a greater decline in future public pension benefits have a smaller share of stocks and a larger share of bonds in their portfolio of financial assets, but both are in small quantities. The most important factors affecting the relatively low investment in stocks by Japanese elderly are educational and income differences, rather than their low expectations about their future pension benefits.

Suggested Citation

  • Okumura, Tsunao & Usui, Emiko, 2021. "Pension Expectations and Household Portfolio Choice of the Elderly in Japan," CIS Discussion paper series 694, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:cisdps:694
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    References listed on IDEAS

    as
    1. Iwaisako, Tokuo, 2009. "Household portfolios in Japan," Japan and the World Economy, Elsevier, vol. 21(4), pages 373-382, December.
    2. Tsunao Okumura & Emiko Usui, 2014. "The effect of pension reform on pension-benefit expectations and savings decisions in Japan," Applied Economics, Taylor & Francis Journals, vol. 46(14), pages 1677-1691, May.
    3. Spaenjers, Christophe & Spira, Sven Michael, 2015. "Subjective life horizon and portfolio choice," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 94-106.
    4. Adeline Delavande & Susann Rohwedder, 2011. "Individuals' uncertainty about future social security benefits and portfolio choice," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(3), pages 498-519, April.
    5. C. Y. Horioka & H. Fujisaki & W. Watanabe & T. Kouno, 2000. "Are Americans More Altruistic than the Japanese? A U.S.-Japan Comparison of Saving and Bequest Motives," International Economic Journal, Taylor & Francis Journals, vol. 14(1), pages 1-31.
    6. Horioka, C.Y. & Fujisaki, H. & Watanabe, W. & Kouno, T., 2000. "Are Americans more Altruistic than the Japanese Comparison of Saving and Bequest Motives," ISER Discussion Paper 0487, Institute of Social and Economic Research, Osaka University.
    7. Bottazzi, Renata & Jappelli, Tullio & Padula, Mario, 2011. "The portfolio effect of pension reforms: evidence from Italy," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(1), pages 75-97, January.
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    More about this item

    Keywords

    Household portfolio choice; subjective expectations; pension benefits; Japan;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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