Traditional Life Cycle Models Research Articles

СОПОСТАВИТЕЛЬНЫЙ АНАЛИЗ ЖИЗНЕННОГО ЦИКЛА ОРГАНИЗАЦИИ ПО МОДЕЛИ И. АДИЗЕСА И ЖИЗНЕННОГО ЦИКЛА ПРОЕКТА В РАМКАХ ПРОЕКТНООРИЕНТИРОВАННОЙ МЕТОДОЛОГИИ УПРАВЛЕНИЯ

The relevance of the topic is determined by the existing conditions of transition of modern organizations to new management paradigms. World trends of project-oriented management are increasingly penetrating into domestic management practices. In domestic practice, the diversification of operational processes of the organization from projects faces difficulties in determining the intersection of the stages of the life cycle of the organization and the life cycle of the project, especially in the framework of strategic projects of the organization. Project-oriented management methodology is a modern means of ensuring a high level of competitiveness, but does not have sufficient understanding on the part of strategic and operational management of the organization. The greatest interest in this article is shown to the search for ways to form new approaches to the organization of project-oriented management in modern domestic organizations. Also, special attention is paid to the analysis of the current mechanisms of organization life cycle management of the organization and the project, based on the mechanism of combining the two approaches to management. The analysis of the application of the life cycle model of I. Adizes in the management of modern domestic organizations, as well as the analysis of the applicability of the traditional life cycle model of project management. The aim of the study is to identify ways to manage modern organizations by combining Adizes' life cycle model and the project life cycle model. The objectives of the study are reduced to the analysis of key factors contributing to the integration of the two approaches to the management of project-oriented organizations. Research results. The comparative analysis of the model of the life cycle of the organization I.Adizes and the model of the life cycle of the project is carried out. on the basis of results of the analysis of characteristics of stages of each of the models, proposals on use of the model of the life cycle of the project as a basic paradigm of management of the project-oriented organization as a whole are made. The problem of applicability of the proposed methodology is revealed, which requires practical confirmation and additional theoretical study.

The Retirement Consumption Puzzle: A Mental Accounting Explanation

Recent developments in cognitive psychology and behavioral economics may explain the lower-than-predicted asset decumulation behavior posited by traditional life-cycle models during retirement, dubbed the retirement consumption puzzle. This study examines if mental accounting could be used to explain the retirement consumption puzzle. Utilizing panel data collected from the 1992–2018 Health and Retirement Studies, retiree age and age squared are examined using fractional polynomials and fixed effects regressions for their associations with varying categorical retiree asset decumulation patterns, including retiree wealth, nonhousing wealth, stocks, retirement accounts, bonds, liquid assets, vehicles, primary residence, and home equity. The results suggest that varying asset decumulation behaviors exist among retirees, which could be explained by retirees’ discretionary spending propensities. The discussion highlights the importance of understanding retiree behavioral spending constraints to allow for smooth consumption paths.

Challenges in Curating Interdisciplinary Data in the Biodiversity Research Community

Challenges in Curating Interdisciplinary Data in the Biodiversity Research Community

Life-cycle portfolio choice with imperfect predictors

We study quantitatively how uncertainty in expected stock return predictability affects life-cycle portfolio choice and wealth accumulation in the presence of undiversifiable labor income risk. Households filter information about future expected returns from observed predictors and realized stock returns. Therefore, optimal portfolio choice does not only depend on financial wealth and age, as in more traditional life-cycle models. Counterfactuals demonstrate the magnitude of portfolio demand changes that depend on perceptions about underlying expected returns. On average, life-cycle asset allocation becomes more conservative than models with either i.i.d. stock returns, or with clearer signals about expected stock returns.

The Role of Knowledge Management in Balancing Exploration and Exploitation in E-Commerce Firms

This article focuses on the role of knowledge management and organizational learning in e-commerce firms as they develop and prosper; theoretical and applied issues of balancing exploration and exploitation for their survival, growth, and profitability are discussed. Knowledge management is presented as central to learning that facilitates long-term success. The concept of micro-formalization related to Agile management practices is proposed as an approach that allows young companies in dynamic sectors to implement learning systems with an adequate but minimal level of formalization without experiencing crises inherent to traditional life-cycle models, and without resorting to rigid procedures which stifle creativity.

Life-Cycle Portfolio Choice with Imperfect Predictors

We study quantitatively how uncertainty in expected stock return predictability affects life-cycle portfolio choice and wealth accumulation in the presence of undiversifiable labor income risk. Households filter information about future expected returns from observed predictors and realized stock returns. Therefore, optimal portfolio choice does not only depend on financial wealth and age, as in more traditional life-cycle models. Counterfactuals demonstrate the magnitude of portfolio demand changes that depend on perceptions about underlying expected returns. On average, life-cycle asset allocation becomes more conservative than models with either i.i.d. stock returns, or clearer signals about expected stock returns.

Hedging recessions

Traditional life-cycle models conclude that individuals should be fully invested in stocks when young—in stark contrast to observed stock holdings—and then gradually replace stocks with bonds as retirement is approaching. We show that a carefully specified and calibrated model of unemployment risk reduces the early-life stock holdings dramatically. The reduction is driven by the decline in current and expected future income caused by unemployment, the relatively high unemployment risk of young adults, and the business cycle variations in un- and reemployment probabilities that tend to deteriorate exactly when stocks perform poorly.

Optimal Portfolio Choice Over the Life Cycle with Social Security

This paper examines how households should optimally allocate their portfolio choices between risky stocks and risk-free bonds over their lifetime. Traditional lifecycle models in previous work suggest that the allocation toward stocks should start high (near 100%) early in life and decline over a person’s age as human capital depreciates. These models also suggest that, with homothetic utility, the allocation should be roughly independent of a household’s permanent income. The actual empirical evidence, however, indicates more of a “hump” shape allocation over the lifecycle; the lifetime poor also hold a smaller percentage of their portfolio in stocks relative to higher income groups. Households, therefore, appear to be making considerable “mistakes” in their portfolio allocation. Target date funds, which have grown enormously during the past five years, aim to simplify the investment process in a manner consistent with the predictions of this traditional model. We reconsider the portfolio choice allocation in a computationally-demanding lifecycle model in which households face uninsurable wage shocks, uncertain lifetime as well as a progressive and wage-indexed social security system. Social security benefits, therefore, are correlated with stock returns at a low frequency that is more relevant for lifecycle retirement planning. We show that this model is able to more closely replicate the key stylized facts of portfolio choice. In fact, when calibrated to the age-based income-wealth ratios found in the Survey of Consumer Finances, we demonstrate that the portfolio allocation “mistakes” being made by the vast majority of households actually lead to larger levels of welfare relative to the traditional advice incorporated in target date funds.

Consumption-Income Sensitivity and Portfolio Choice.

Contrary to the predictions of traditional life-cycle models, household consumption is excessively sensitive to current income. Similarly, weak evidence of income hedging runs against standard portfolio theory. We link these two puzzles by modifying the theoretical framework of Viceira (2001) to study how consumption-income sensitivities generated by income in the utility function affect households' portfolio choices. Empirically, we find that consumption-income sensitivities affect asset allocation through the income hedging channel. In particular, we show that the interaction between consumption-income sensitivity and the correlation of income growth to stock market returns is an important explanatory variable for households' stock market holdings. Received October 20, 2016; editorial decision April 25, 2018 by Editor Wayne Ferson.

Life-Cycle Investing and Smart Beta Strategies

In traditional life-cycle models, the equity-bond glide path shifts investment allocation from riskier assets to relatively safer assets as investors approach retirement. In this article, we develop a smart beta glide path that seeks to take advantage of broad, persistent patterns within asset classes to identify securities with higher risk-adjusted returns than the market. Within equities, investors can shift from return-enhancing strategies—like value, momentum, size, and quality—to risk-reducing strategies like minimum volatility as they move through the life cycle. Adopting smart beta glide paths may improve Sharpe ratios by up to 20% over a standard equity-bond glide path.

Life Cycle Investing and Smart Beta Strategies

In traditional life cycle models, the equity-bond glide path shifts investment allocation from riskier assets to relatively safer assets as investors approach retirement. In this paper, we develop a smart beta glide path which seeks to take advantage of broad, persistent patterns within asset classes to identify securities with higher risk-adjusted returns than the market. Within equities, investors can shift from return-enhancing strategies — like value, momentum, size, and quality — to risk-reducing strategies like minimum volatility as they move through their life cycles. Adopting smart beta glide paths may improve Sharpe ratios by up to 20% over a standard equity-bond glide path.

Life-Cycle Asset Allocation and Unemployment Risk

In this paper we extend the traditional life cycle model of saving and portfolio choice to allow for possible long-term unemployment spells to have permanent effects on subsequent labor income prospects. The risk of losing future labor income could imply strong human capital erosion for the investor at any age, dampening the incentive to invest in risky stocks. The resulting optimal portfolio share invested in stocks may be relatively flat in age, more in line with the available evidence and contrary to the predictions of traditional life-cycle models.

License to Spend: Consumption-Income Sensitivity and Household Portfolio Choice

Contrary to the predictions of traditional life-cycle models, households do not engage in perfect consumption smoothing. Similarly, weak evidence of income hedging runs against standard portfolio theory. We link these two puzzles by proposing a model in which investors derive utility from consumption and income status. In contrast to the traditional life-cycle model, status conscious investors use financial assets to either over- or under-hedge income fluctuations, depending on whether they treat consumption and status as complements or substitutes. We confirm the predictions of the status preference model using data from the PSID, and find that status preferences empirically affect the income hedging motive in household portfolio decisions.

Boon or bane: 401(k) loans and employee contributions.

Economic and behavioral theories arrive at different conclusions about the effect of being allowed to borrow from one's defined-contribution (DC) retirement plan on people's contributions to DC plans. Traditional life-cycle models unambiguously suggest that the borrowing option makes people better off than not being able to borrow. Households consequently contribute more to their DC plans than they would absent the borrowing option. Previous research finds that the ability to borrow from a DC plan increases contemporaneous contributions, consistent with traditional models. Behavioral finance, in contrast, suggests that some workers may operate with nonlinear time discounting. They plan on saving more in the future but change their mind and save less than initially planned as time passes. These workers may enjoy higher lifetime utility if they have no loan option because DC plans serve as commitment devices for retirement saving. The money cannot be used prior to retirement. Absent this commitment device, contributions may be lower for some households than would be the case without a DC loan option. We study DC plan contributions for households with heterogeneous preferences about discounting. We separate households into those that demonstrate inconsistent (or paradoxical) borrowing behavior, which may reflect nonlinear time discounting, and those with more consistent borrowing behavior. We find that a DC loan option raises current savings, but does so more for households with consistent borrowing behavior than for those with inconsistent borrowing behavior.

Portfolio Implications of Cointegration Between Labor Income and Dividends

This paper analyzes the implications of cointegration between labor income and dividends for the optimal portfolio weight for stocks. In a recent paper, Benzoni et al. (J Finance 62:2123–2167, 2007) claim that, as a result of cointegration, the optimal weight in stocks may be smaller for young investors than for older investors. This contradicts the traditional life-cycle models which typically imply portfolio weights that decrease with age. This paper shows that when stock returns are affected by other factors than dividend growth, for example due to time-varying discount rates, the portfolio implications of cointegration are much less severe. In a realistically calibrated model, the life-cycle pattern for the portfolio weight of stocks is flat, except for very young investors.

The life cycle concept in marketing research

PurposeThis research seeks to provide a historical review of the life cycle concept in marketing. The paper aims to show the development of traditional life cycle models and links to the life course perspective.Design/methodology/approachThe authors relate to life events and transitions in consumers' life trajectories, life status, role transitions, and role identities as determinants of consumer behavior. The paper reveals future research potential in the field. Essentially, the authors demonstrate the need for life cycle models grounded on empirical data and discuss related methodological issues.FindingsThis paper provides a temporal systematization of theoretical and empirical life cycle research. The major outcome is an outline of conceptual and methodological research directions that enable researchers to follow the life course perspective and to derive empirically grounded life cycle models.Research limitations/implicationsProviding chronological literature compilations and an evolutionary review of life cycle research, the authors identify future research directions. To encourage empirical development of the concept, the article also refers to the related methodological literature.Practical implicationsBoth marketing thought and practitioners benefit from the insights presented. Marketing managers may better address consumers' changing needs over their lifetime, strengthen customer loyalty and reduce brand switching, thereby enhancing customer lifetime value.Originality/valueThis paper adds to the study of the consumer life cycle by providing a comprehensive anthology of life cycle research from 1910 to 2010. It shows major research streams and reveals future research potential in marketing.

Boon or Bane?: 401(K) Loans and Loan Provisions

Traditional life-cycle models unambiguously predict that having the ability to borrow from defined contribution (DC) plans is utility enhancing since lower liquidity constraints will increase contemporaneous contributions. Behavioral finance, on the other hand, indicates that workers with dynamically inconsistent preferences may enjoy higher lifetime consumption than otherwise if they have no loan option. The lack of loan option acts as a commitment device to preserve savings for future consumption. Absent the commitment device contributions may be lower than otherwise. We study DC plan contributions for those with standard and with dynamically inconsistent preferences and find that a loan option raises current savings, but does so more for households with standard discounting than for those with dynamically inconsistent preferences. The effects on lifetime savings may differ, depending on the actual loans taken out and when the loan option exists. We simulate retirement account balances, using our parameter estimates for contributions and loan amounts, for households with standard and dynamically inconsistent preferences. The simulations show that the net effect is positive for standard discounters, but not necessarily for dynamically inconsistent discounters, depending on the impact of the borrowing option on employee contribution rates to DC plans.

Tourism Development in Madeira: An Analysis Based on the Life Cycle Approach

This paper identifies Madeira Island's growth stage in accordance with Butler's life cycle model. Life cycle analysis is pursued using an econometric approach over an extended period, from 1976 to 2006. The results suggest that Madeira is about to enter the stagnation phase. The industry's development since the 1970s was found to conform to Butler's model, but in its own way. In the case of Madeira, the island's positive image and the time span within each of the life cycle stages challenge the traditional life cycle model, suggesting rather that the maturity stage may persist indefinitely.

House price dynamics: Evidence from Beijing

To study the house price dynamics in China, this paper extends the traditional life-cycle model by incorporating land supply, regime shifts and government regulation factors. The models are estimated with an error correction framework using quarterly data from 2000 to 2007 in Beijing. The conclusions are as follows. (1) There exits a stable co-integration relationship between house price and fundamentals; land supply and financial regimes are also important determinants of long-run equilibrium house prices. (2) Short-run dynamics depend on changes of fundamentals and the adjustment process of housing market. Land supply has a significant impact on house price fluctuations while demand factors such as user costs, income and residential mortgage loan have greater influences. The adjustment speed of real house prices to the long-run equilibrium has been reduced significantly since 2005 which means exogenous shocks can cause prolonged deviation of real house prices from the equilibrium level.

UNCERTAIN LIFETIME AND INTERTEMPORAL CHOICE: RISK AVERSION AS A RATIONALE FOR TIME DISCOUNTING*

This article makes explicit the links between preferences over lotteries on length of life and intertemporal choice. It shows that the approach used by traditional life cycle models to account for uncertain survival corresponds to a strong assumption of risk neutrality with respect to length of life. Relaxing such an assumption leads us to develop a more general formulation of lifetime utility in which time discounting is directly related to preferences over length of life. Exponential and hyperbolic discounting are found to result, in a first approximation, from constant and hyperbolic risk aversion with respect to length of life.