ResearchEconomicsSep 22, 2026

Income Risk and Household Asset Formation: Life-Cycle Portfolio Choice with Reference to Japanese Income Statistics

Would a household save and invest differently if a drop in income lasted for years instead of reversing the following year? Atlas Support’s Economic Research team introduces a model that holds the scale of income variation fixed and compares how its persistence and other features shape saving and stockholding.

Model comparisons anchored to Japanese income statistics

The study compares seven income processes with the same scale of residual income variation but different persistence, compositions of transitory and persistent shocks, or distributions. The model tracks consumption, saving, and stockholding from age 25 through retirement and includes the costs of entering and holding assets in the stock market.

Asset accumulation varies across scenarios

In three scenarios that vary persistence while holding financial conditions fixed, mean financial assets at age 40 range from ¥7.16 million to ¥15.09 million. These results are conditional on the model assumptions and are not direct estimates of Japanese households’ income processes or preferences.