Stochastic goals in financial planning for a two-person household

Radosław Pietrzyk () and Paweł Rokita ()

Statistics in Transition new series, 2015, vol. 16, issue 1, 111-136

Abstract: In household financial planning two types of risk are typically being taken into account. These are life-length risk and risk connected with financing. In addition, also various types of events of insurance character, like health deterioration, are sometimes taken into account. There are, however, no models addressing stochastic nature of household financial goals. The last should not be confused with modelling factors that influence performance of financing the goals, which is a popular research topic. The problem of modelling goals themselves is, in turn, not so well explored. There are two main characteristics that describe a goal: magnitude and time. At least for some goals one or both of these characteristics may show a stochastic nature. This article puts forward a proposition of working goal time and magnitude into a household financial plan and taking their distributions into account when optimizing the plan. A model of two-person household is used. The decision variables of the optimization task are consumption-investment proportion and division of household investments between household members.

Keywords: financial goals; personal finance; intertemporal choice; financial plan optimization; stochastic goals (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://index.stat.gov.pl/repec/files/csb/stintr/csb_stintr_v16_2015_i1_n8.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:csb:stintr:v:16:y:2015:i:1:p:111-136

Access Statistics for this article

Statistics in Transition new series is currently edited by Włodzimierz Okrasa

More articles in Statistics in Transition new series from Główny Urząd Statystyczny (Polska) Contact information at EDIRC.
Bibliographic data for series maintained by Beata Witek ().