Consumption Smoothing Among Working-Class American Families Before Social Insurance
AbstractThis paper examines whether the saving decisions among a large, unique sample of working-class American families around the turn of the twentieth century are consistent with consumption smoothing tendencies in the spirit of the permanent income hypothesis. We develop an econometric model to decompose each family's reported income realization into an expected and an unexpected components, then we estimate marginal propensities to save for each income component. The estimated regression coefficients are remarkably similar to point estimates available from other recent research based on quite different contemporary household data. Marginal propensities to save out of unexpected income shocks are large relative to propensities based on expected income movements, though the former lie much below one and the latter much above zero. Thus, while these data readily reject strict parameterizations of the permanent income hypothesis, we nonetheless conclude that families's saving decisions look quite "modern."
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Houston - Department of Economics in its series Papers with number 98-05.
Length: 39 pages
Date of creation: 1998
Date of revision:
Contact details of provider:
Postal: UNIVERSITY OF HOUSTON, DEPARTMENT OF ECONOMICS, COLLEGE OF SOCIAL SCIENCES, HOUSTON TEXAS 77023 U.S.A.
Web page: http://www.class.uh.edu/econ/
More information through EDIRC
UNEMPLOYMENT ; INCOME ; SAVINGS;
Other versions of this item:
- John A. James & Michael G. Palumbo & Mark Thomas, 2007. "Consumption smoothing among working-class American families before social insurance," Oxford Economic Papers, Oxford University Press, vol. 59(4), pages 606-640, October.
- Michael G. Palumbo & John A. James & Mark Thomas, 1999. "Consumption smoothing among working-class American families before social insurance," Finance and Economics Discussion Series 1999-24, Board of Governors of the Federal Reserve System (U.S.).
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
- N31 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: Pre-1913
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Luigi Pistaferri, 1998.
"Superior Information, Income Shocks and the Permanent Income Hypothesis,"
CSEF Working Papers
07, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Luigi Pistaferri, 2001. "Superior Information, Income Shocks, And The Permanent Income Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 465-476, August.
- Olney, Martha L., 1998. "When Your Word Is Not Enough: Race, Collateral, and Household Credit," The Journal of Economic History, Cambridge University Press, vol. 58(02), pages 408-431, June.
- Deaton, Angus, 1991.
"Saving and Liquidity Constraints,"
Econometric Society, vol. 59(5), pages 1221-48, September.
- Christopher D. Carroll, 1996.
"Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis,"
NBER Working Papers
5788, National Bureau of Economic Research, Inc.
- Carroll, Christopher D, 1997. "Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 1-55, February.
- Christopher D Carroll, 1990. "Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis," Economics Working Paper Archive 371, The Johns Hopkins University,Department of Economics, revised Aug 1996.
- Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244.
- R. Glenn Hubbard & Jonathan Skinner & Stephen P. Zeldes, 1994.
"The Importance of Precautionary Motives in Explaining Individual and Aggregate Saving,"
NBER Working Papers
4516, National Bureau of Economic Research, Inc.
- Hubbard, R. Glenn & Skinner, Jonathan & Zeldes, Stephen P., 1994. "The importance of precautionary motives in explaining individual and aggregate saving," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 59-125, June.
- Keyssar,Alexander, 1986. "Out of Work," Cambridge Books, Cambridge University Press, number 9780521297677, November.
- Kantor, Shawn Everett & Fishback, Price V, 1996. "Precautionary Saving, Insurance, and the Origins of Workers' Compensation," Journal of Political Economy, University of Chicago Press, vol. 104(2), pages 419-42, April.
- Carter, Susan B. & Sutch, Richard, 1996. "Myth of the Industrial Scrap Heap: A Revisionist View of Turn-of-the-Century American Retirement," The Journal of Economic History, Cambridge University Press, vol. 56(01), pages 5-38, March.
- Palumbo, M.G., 1998. "Estimating the Effects of Earnings Uncertainty on Families's Saving and Insurance Decisions," Papers 98-07, Houston - Department of Economics.
- Romer, Christina, 1986. "Spurious Volatility in Historical Unemployment Data," Journal of Political Economy, University of Chicago Press, vol. 94(1), pages 1-37, February.
- Alessie, Rob & Lusardi, Annamaria, 1997. "Saving and income smoothing: Evidence from panel data," European Economic Review, Elsevier, vol. 41(7), pages 1251-1279, July.
- Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, vol. 82(1), pages 15-33, March.
- Robert M. Townsend, 1995. "Consumption Insurance: An Evaluation of Risk-Bearing Systems in Low-Income Economies," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 83-102, Summer.
- James, John A, 1993. "Changes in Economic Instability in 19th-Century America," American Economic Review, American Economic Association, vol. 83(4), pages 710-31, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel).
If references are entirely missing, you can add them using this form.