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Diminished Expectations of Nuclear War and Increased Personal Savings: Evidence from Individual Survey Data

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  • Russett, Bruce
  • Slemrod, Joel

Abstract

At the end of 1983 Gallup polls showed that 52 percent of Americans thought that the probability of a world war in the next 10 years was 50% or higher; by 1989 the percentage had dropped to 29%. Fear of war of this pervasiveness is bound to have an effect on decisions about present versus uncertain future consumption. This paper investigates the cross-sectional relationship between saving and fear of war using responses to telephone surveys conducted during April and October of 1990. The analysis shows that an individual's professed level of fear about the likelihood of nuclear war was significantly negatively related to the probability of being a saver rather than a dissaver, to changes in actual saving, and to saving plans relative to actual savings. Fear of war had an independent effect controlling for many demographic, economic and psychological characteristics. These results are broadly consistent with other evidence on the relationship between aggregate saving and fear of war over time and across countries.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 83 (1993)
Issue (Month): 4 (September)
Pages: 1022-33

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Handle: RePEc:aea:aecrev:v:83:y:1993:i:4:p:1022-33

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  1. Joel Slemrod, 1988. "Fear of Nuclear War and Intercountry Differences in the Rate of Saving," NBER Working Papers 2801, National Bureau of Economic Research, Inc.
  2. Patric H. Hendershott & Joe Peek, 1985. "Household Saving: An Econometric Investigation," NBER Working Papers 1383, National Bureau of Economic Research, Inc.
  3. Joel Slemrod, 1982. "Post-War Capital Accumulation and the Threat of Nuclear War," NBER Working Papers 0887, National Bureau of Economic Research, Inc.
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Cited by:
  1. Christopher W. Crowe, 2009. "Irrational Exuberance in the U.S. Housing Market," IMF Working Papers 09/57, International Monetary Fund.
  2. Levy, Ori & Galili, Itai, 2006. "Terror and trade of individual investors," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(6), pages 980-991, December.
  3. Robert J. Barro, 2005. "Rare Events and the Equity Premium," NBER Working Papers 11310, National Bureau of Economic Research, Inc.

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