Michael Ziegelmeyer

Who Lost the Most? Financial Literacy, Cognitive Abilities, and the Financial Crisis

We study how and to what extent private households are affected by the recent financial crisis and how their financial decisions are influenced by this shock. Our analysis reveals that individuals with low levels of financial literacy are less likely to have invested in the stock market and thus are less likely to report losses in wealth. Yet, individuals with low financial literacy are more likely to sell their assets which lost in value (realize losses). This reaction to short-term losses has potential long-term consequences if individuals do not participate in markets recovery and face lower returns in the long run.

Illuminate the unknown: evaluation of imputation procedures based on the SAVE survey

Questions about monetary variables (such as income, wealth or savings) are key components of questionnaires on household finances. However, missing information on such sensitive topics is a well-known phenomenon which can seriously bias any inference based only on complete cases analysis. Many imputation techniques have been developed and implemented in several surveys. Using the German SAVE data, this paper evaluates different techniques for the imputation of monetary variables implementing a simulation study, where a random pattern of missingness is imposed on the observed values of the variables of interest. New estimation techniques are necessary to overcome the upward bias of monetary variables caused by the initially implemented imputation procedure. A Monte-Carlo simulation based on the observed data shows the superiority of the newly implemented smearing estimate to construct the missing data structure. All waves are consistently imputed using the new method.

Household Saving Behaviour and Credit Constraints in the Euro Area

We study the role of household saving behaviour, of individual motives for saving and that of perceived liquidity constraints in 15 Euro Area countries. The empirical analysis is based on the Household Finance and Consumption Survey, a new harmonized data set collecting detailed information on wealth holdings, consumption and income at the household level. Since the data is from 2010-2011, strong conclusions as regards the present are difficult to draw. This is because the crisis may have affected the data, especially in countries that were severely hit. Nevertheless we find evidence of some degree of homogeneity across countries with respect to saving preferences and the relative importance of different motives for saving. In addition, credit constraints are more heterogeneous across geographic regions and perceived to be binding for specific groups of respondents. Households living in Mediterranean countries report to be more subject to binding liquidity constraints than households living in Continental Europe. Household characteristics and institutional macroeconomic variables are significant and economically important determinants of household saving preferences and credit constraints.

Wealth differences across borders and the effect of real estate price dynamics: Evidence from two household surveys

Crossing borders, be it international or regional, often go togther with price wage or indeed wealth discontinuities. This paper identifies substantial wealth differences between Luxembourg resident households and cross-border commuter households despite their similar incomes. The av-erage (median) net wealth difference is estimated to be €367,000 (€129,000) and increases for higher percentiles. Using several different regression and decomposition techniques, spatial (regional) dif-ferences in real estate price developments, and thus differences in accumulated nominal capital gains are shown to be one main driving factor for these wealth differences. Other factors contribut-ing to the observed wealth differences are differences in age, income, education and other house-hold characteristics.

Nursing Home Residents Make a Difference - The Overestimation of Saving Rates at Older Ages

Based on the HRS, I find strong dissaving of nursing home residents and a significant overestimation of U.S. saving rates from age 75 onwards if nursing home residents are excluded as in most micro datasets.

Coverage of the Privately Funded Old-Age Provision (Riester-Pension) in Germany - Did the Financial and Economic Crisis Leave Its Mark? (Verbreitung Der Riester-Rente - Hat Die Finanz- Und Wirtschaftskrise Spuren Hinterlassen?

The financial and economic crisis also left its mark on the privately funded old-age provision (Riester-Pension) in Germany: an analysis of the SAVE panel dataset shows that the coverage with Riester-contracts stagnated in 2008. Only households with low incomes exhibited small but positive growth of Riester-Pension coverage. The stagnation after a long and successful growth process should rather be interpreted as a consequence of the financial and economic crisis then as a saturation of demand. The privately funded old-age provision in Germany is not in a crisis: The saving volume per Riester-contract increased in 2008. This growth is mainly observed in the top income quintiles where a large fraction of Riester-savers increased their savings as required by the regulation to obtain full government subsidies. Die Finanz- und Wirtschaftskrise hat auch bei der staatlich geforderten Altersvorsorge (Riester-Rente) Spuren hinterlassen: Die Analyse der SAVE-Befragung 2009 zeigt, dass der Verbreitungsgrad der Riester-Rente Ende des Jahres 2008 stagnierte. Diese Stagnation betraf allerdings nicht die Haushalte mit niedrigen Einkommen. Bei diesen schwachte sich der Zuwachs der Verbreitung lediglich ab. Die Stagnation des Verbreitungsgrades kann nicht als Indiz fur einen generellen Sattigungseffekt, also fur ein Ende der Dynamik bei der Verbreitung der Riester-Rente, verwendet werden. Vielmehr handelt es sich um einen Sondereffekt durch die Finanzkrise. Dass die Finanz - und Wirtschaftskrise nicht zu einer Krise der privaten Altersvorsorge gefuhrt hat, beweist die Entwicklung des Sparvolumens je Vertrag. Dieses ist im Jahr 2008 sogar uberproportional gestiegen. Der uberproportionale Anstieg ist insbesondere fur die oberen Einkommensquintile festzustellen, in welchen zumindest ein Grosteil der Riestersparer die Riestertreppe mitgeht. NOTE: This paper has been published exclusively in German.