The 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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Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number
1997:19.
Length: 29 pages Date of creation: 28 Aug 1997 Date of revision: Handle: RePEc:hhs:uunewp:1997_019
Contact details of provider: Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden Phone: + 46 18 471 25 00 Fax: + 46 18 471 14 78 Email: Web page: http://www.nek.uu.se/ More information through EDIRC
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References listed on IDEAS 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.:
Agell, Jonas & Lommerud, Kjell Erik, 1992.
"Union Egalitarianism as Income Insurance,"
Economica,
London School of Economics and Political Science, vol. 59(235), pages 295-310, August.
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