Lower-income households spend more when the stock market is rising

The bullish stock market may have people bragging about their 401(k) balances, but they’re also running to the stores.

Stock market trends fuel people’s spending habits, and the link is more pronounced for households on the bottom half of the income spectrum than the top, according to a study of Swedish households distributed Monday by the National Bureau of Economic Research. The researchers looked at wealth tax data from 1999 to 2007, and measured consumption by looking at disposable income.

Consumption in lower-income households — which make up 7% of overall stock holdings — jumped 10% when the stock market was doing well, while consumption in higher-income households increased by just 5%, researchers found.

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