Stock market behavior linked to consumption habits, impacting prices and volatility.
The article explains how stock prices go up and down based on people's spending habits. By looking at how much people consume and adding a slow-changing habit factor, the researchers found that this affects how risky assets like stocks are priced. Their model also predicts problems with traditional models and shows that stock market fluctuations can have big impacts on people's well-being. The researchers' approach helps understand why stock prices change and how it affects the economy.