Risk and Saving in Two-Person Households: More Scope for Precautionary Saving
AbstractThe existing literature suggests that when the saving decision of two-earner households under risk is analysed, standard results on the existence of precautionary saving no longer apply: precautionary saving is obtained if and only if very stringent conditions hold. This paper shows that when the two-earner household's saving decision is formulated more generally, standard assumptions suffice for precautionary saving to exist under increases in risk of the first and second orders, but not for higher orders.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6824.
Length: 20 pages
Date of creation: Aug 2012
Date of revision:
Publication status: published as 'Risk and Precautionary Saving in Two-Person Households' in: American Economic Review, 2014, 104 (3), 1040-1046
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Other versions of this item:
- Patricia Apps & Yuri Andrienko & Ray Rees, 2012. "Risk and Saving in Two-Person Households: More Scope for Precautionary Saving," CEPR Discussion Papers 674, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- D10 - Microeconomics - - Household Behavior - - - General
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-30 (All new papers)
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.:
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CESifo Working Paper Series
2388, CESifo Group Munich.
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