The Alignment of Household Preferences and Financial Decisions Leading up to Retirement

Published: 2022


We report on research that links survey and administrative data to investigate how within-couple differences in preferences and financial decision-making abilities affect household finances. We study whether within-household differences in preferences or financial decision-making abilities influence household choices and, thus, retirement readiness. Initial results indicate that, while individual variation in saving and portfolio preferences and decision-making ability is significantly related to individual variation in financial outcomes, there is only modest evidence that within-household variation in these measures is associated with between-household differences in expenditure, liquidity, and outcomes.

Key Findings

    • The initial results suggest that, for purposes of explaining important household financial outcomes, differences in average measures of preferences and abilities within households are more important than within-household differences in preferences and abilities.
    • We find no evidence of an important relationship between the measure of decision-making ability (DMA) and expenditures.
    • There is some evidence that within-household conflicts in risk preferences are associated with higher levels of household expenditure.
    • The average levels of time preference or decision-making ability are, however, more strongly associated with between-household differences in spending and liquidity.


Carvalho, Leandro, Arna Olafsson, Dan Silverman. 2022. “The Alignment of Household Preferences and Financial Decisions Leading up to Retirement.” Ann Arbor, MI. University of Michigan Retirement and Disability Research Center (MRDRC) Working Paper; MRDRC WP 2022-446.