⁵Nonfinancial income typically accounts for the great majority of most households’ total income, while risky assets like stocks represent a relatively small percentage of total wealth. Furthermore, stock returns are poorly correlated with the return on the index portfolio of all the assets in the economy. Idiosyncratic risk is even more poorly spanned by market risk and is several orders of magnitude greater than aggregate risk (Jagannathan, Kubota, and Takehara (1998)).