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Precautionary saving and social learning across generations: an experiment

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  • T. Parker Ballinger
  • Michael G. Palumbo
  • Nathaniel T. Wilcox

Abstract

We use experimental methods to study how individuals solve life cycle 'precautionary savings' tasks. Some results resemble previous experimental work on dynamic optimisation tasks. Within our experiment, however, opportunities exist for subjects to learn from one another. Subjects participated in three-member 'families'. Second and third 'generation' subjects observe and/or communicate with their 'antecedent' first or second generation subject. We find that later generations perform significantly better than earlier generations. The results speak to questions concerning the precautionary model of consumption, the modelling of dynamic decision behaviour more generally, and the possible importance of social learning to individual decision-making. Copyright 2003 Royal Economic Society.

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 113 (2003)
Issue (Month): 490 (October)
Pages: 920-947

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Handle: RePEc:ecj:econjl:v:113:y:2003:i:490:p:920-947

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Citations

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Cited by:
  1. Thomas Meissner, 2013. "Intertemporal Consumption and Debt Aversion:An Experimental Study," SFB 649 Discussion Papers SFB649DP2013-045, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  2. Simonsohn, Uri & Karlsson, Niklas & Loewenstein, George & Ariely, Dan, 2008. "The tree of experience in the forest of information: Overweighing experienced relative to observed information," Games and Economic Behavior, Elsevier, vol. 62(1), pages 263-286, January.
  3. Roberto Ricciuti, 2005. "Bringing Macroeconomics into the Lab," Labsi Experimental Economics Laboratory University of Siena 004, University of Siena.
  4. John Duffy & Enrica Carbone, 2013. "Lifecycle Consumption Plans, Social Learning and External Habits: Experimental Evidence," Working Papers 513, University of Pittsburgh, Department of Economics, revised Sep 2013.
  5. Alexander L. Brown & Colin F. Camerer & Zhikang Eric Chua, 2006. "Learning and Visceral Temptation in Dynamic Savings Experiments," Levine's Bibliography 321307000000000048, UCLA Department of Economics.
  6. John Duffy, 2008. "Macroeconomics: A Survey of Laboratory Research," Working Papers 334, University of Pittsburgh, Department of Economics, revised Jun 2014.
  7. Ferruccio Ponzano & Roberto Ricciuti, 2012. "An Experimental AK Model of Growth," CESifo Working Paper Series 3744, CESifo Group Munich.
  8. T. Ballinger & Eric Hudson & Leonie Karkoviata & Nathaniel Wilcox, 2011. "Saving behavior and cognitive abilities," Experimental Economics, Springer, vol. 14(3), pages 349-374, September.
  9. Enrique Fatás & Juan A. Lacomba & Francisco M. Lagos & Ana I. Moro, 2008. "Experimental tests on consumption, savings and pensions," ThE Papers 08/14, Department of Economic Theory and Economic History of the University of Granada..
  10. John List & David Reiley, 2008. "Field experiments," Artefactual Field Experiments 00091, The Field Experiments Website.
  11. Enrica Carbone, 2005. "Demographics and Behaviour," Experimental Economics, Springer, vol. 8(3), pages 217-232, September.
  12. Tomoki Kitamura & Yasuhiro Yonezawa & Munenori Nakasato, 2010. "Saving Behavior under the Influence of Income Risk: An Experimental Study," Economics Bulletin, AccessEcon, vol. 30(2), pages 967-974.
  13. Ekaterina Sherstyuk & Nori Tarui & Majah-Leah V. Ravago & Tatsuyoshi Saijo, 2013. "Inter-Generational Games with Dynamic Externalities and Climate Change Experiments," Working Papers 201320, University of Hawaii at Manoa, Department of Economics.
  14. Wolfgang J. Luhan & Johann Scharler, 2013. "Monetary Policy, Inflation Illusion and the Taylor Principle – An Experimental Study," Ruhr Economic Papers 0402, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  15. Charness, Gary B & Cabrales, Antonio, 2008. "Optimal Contracts With Team Production And Hidden Information: An Experiment," University of California at Santa Barbara, Economics Working Paper Series qt3bb3p3t3, Department of Economics, UC Santa Barbara.
  16. Markus Jäntti & Ravi Kanbur & Jukka Pirttilä & Carol Newman & Finn Tarp & Katleen Van Den Broeck, 2014. "Social Capital, Network Effects, and Savings in Rural Vietnam," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 79-99, 03.

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