Precautionary Saving and Altruism
AbstractThe potential importance of the precautionary motive for saving has been noted in many studies during the last decades. This paper examines the determination of precautionary saving when people have access to intra-family risk sharing. I show that, with uncertain future income, altruism per se can induce time consistent, however, not necessarily ex ante efficient, risk sharing between risk averse spouses. The more altruistic the couple is, the closer is the solution to the efficient one. Also welfare and savings effects from social insurance turn out to be sensitive to assumptions about family structure. For risk sharing couples, the introduction of a compulsory insurance scheme may have substantially smaller effects on welfare and precautionary savings.
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Bibliographic InfoPaper provided by Uppsala - Working Paper Series in its series Papers with number 1997-19.
Length: 29 pages
Date of creation: 1997
Date of revision:
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Postal: UPPSALA UNIVERSITY, DEPARTMENT OF ECONOMICS, S-751 20 UPPSALA SWEDEN.
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Fax: + 46 18 471 14 78
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More information through EDIRC
SAVINGS ; ALTRUISM ; RISK ; MARRIAGE ; INSURANCE ; FAMILY;
Other versions of this item:
- D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
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