What is in the shopping chart of pensioners? An analysis on the consumption behavior of Dutch pensioners and the implications for the indexation of pensions

  • Ashik Anwar Ali Ashik Anwar Ali

This paper investigates the consumption behavior of Dutch pensioners and its implications for the indexation of pensions. For this purpose we use data from the CBS Budgetonderzoek and an OLS and 2SLS framework. We present evidence for a drop in consumption of approximately 1.2% every year an individual becomes older starting from the age of 66 to 70 in the Netherlands. Furthermore, we do notfind evidence for a tipping point after retirement from which on consumption growth becomes negligibly small. Examining the consumption bundle of pensioners, we notice that the top three expenditure categories are housing, food and transport. Moreover, in the course of life individuals attach more weight to expenditures on utility, care and housing. On the other hand, clothing, leisure and transport become less important. Expenditures on food remain equally important over ages. Continuing, comparing the consumption bundles of pensioners with workers only very small differences are found. In line, a comparison of the inflation rate of the pensioners’ consumption bundle with workers’, provides us evidence that there are no differences present between the two groups. In conclusion, there is no evidence to deviate from the current indexation scheme, where no distinction is made between pensioners and workers.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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