shocks.

They will face more troubles because they have to resolve many expense

commitments.

2.1.3 Wealth shock

When studying how wealth affects household behavior, it is useful to start with a complete

picture of net worth levels, composition, and distribution. The stock market accounts for

about a quarter of household net worth. The value of tangible assets, real estate, and durable

consumer goods such as vehicles occupied by the main owners is about the same as the value

of the company's capital. Other financial assets such as interest-bearing deposits and bonds

and a range of other assets such as equity interests in unincorporated businesses account for

the rest (Poterba, 2000).

(Pool, Needham, Burgard, & Elliott, 2017) stated that a negative wealth shock is a huge and

sudden loss of net assets due to the rapid depletion of assets and/or the accumulation of new

debt. The wealth shock on the individual level may be caused by macroeconomic events such

as recessions, personal events such as marital unrest or losses due to the development of

major diseases. For those who are about to retire and have a few years left at work to regain

their lost wealth, these losses will permanently change the financial resources available to

them in later life.

The impact of equity assets inside and outside the retirement account is closely linked to the

upward revision of expected working hours and retirement age. The 10% impact on post-

retirement financial assets is associated with a 4% increase in the reported upward trend in
retirement age. This shows that family planning, which is based on the key mechanisms of

the human capital portfolio selection model, plans to increase the labor supply to make up for

losses during the collapse (Gollier, 2002). There is evidence that the impact of expected

household spending on wealth has hardly changed. A $1 shock to retirement financial assets

will reduce expenditures by $0.02 (Hanspal, Weber, & Wohlfart, 2020).