Erik Hurst, a professor of economics at the University of Chicago Graduate School of Business, has won the 2006 TIAA-CREF Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security for his article about the transition to retirement titled “Consumption versus Expenditure,” published in the Journal of Political Economy.
This is the fifth time a Chicago GSB faculty member has won the award in the past seven years.
Hurst, who also is the Neubauer Family Faculty Fellow at the school, shares the award with co-author Mark Aguiar, a former Chicago GSB faculty member now at the University of Rochester.
The award is given by the TIAA-CREF Institute, the research and educational arm of TIAA-CREF, a pension system for people employed in education and research.
Named in honor of the Nobel laureate economist and University of Chicago alumnus Paul A. Samuelson, the award is given each year in recognition of an outstanding research publication containing ideas that the public and private sectors can use to maintain and improve Americans’ financial well-being.
As part of their research, Hurst and Aguiar conducted a detailed analysis of food expenditures and food consumption in retirement which showed that neither the quality nor the quantity of food intake deteriorates when people retire. Their findings contradict previous research documenting a “retirement consumption puzzle.” The earlier research pointed to a dramatic decline in expenditures at the time of retirement for the average household.
Hurst and Aguiar argue that expenditures are a poor proxy for actual household well being, particularly among the retired. The reason is that retirees have an abundance of time on their hands allowing them to more easily engage in time intensive activities such as cooking meals at home, bargain shopping and coupon clipping which reduces the prices they pay for their consumption goods. As a result, household expenditures will fall in retirement even when actual household consumption remains constant.
“The authors thus provide an improved methodology for analyzing the well-being of households as they transition into retirement,” the TIAA-CREF Institute said.
Hurst will receive the award at the annual meeting of the Allied Social Science Association, January 5 in Chicago.
Previous winners of the Paul A. Samuelson Award from Chicago GSB were Richard Thaler, the Ralph and Dorothy Keller Distinguished Service Professor of Behavioral Science and Economics in 2005 and John Cochrane, the Myron S. Scholes Professor of Finance in 2001.
Brigitte Madrian won the award in 2002 and Nicholas Barberis won in 2000. Both Madrian and Barberis taught at Chicago GSB when they received the award.