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Fatalism and Savings

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  • Stephen, Wu
  • Joel, Shapiro

Abstract

We examine the impact of fatalism, the belief that one has little or no control over future events, on the decision of whether or not to save. We develop a model that predicts that fatalism decreases savings for moderately risk averse individuals, increases savings for highly risk averse individuals, and otherwise has no impact. Furthermore, fatalism decreases effort in learning about savings and investment options. We use data from National Longitudinal Survey of Youth (NLSY) and find general support for the theoretical predictions of the model. The results are robust to the inclusion of a number of additional control variables.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24852.

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Date of creation: Jul 2010
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Handle: RePEc:pra:mprapa:24852

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Keywords: fatalism; savings; risk aversion;

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References

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  1. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2005. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," Discussion Papers of DIW Berlin 511, DIW Berlin, German Institute for Economic Research.
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Cited by:
  1. Ruiu, Gabriele, 2012. "Is fatalism a cultural belief? An empirical analysis on the origin of fatalistic tendencies," MPRA Paper 41705, University Library of Munich, Germany.
  2. Ludek Kouba & Hans Pitlik, 2014. "I wanna live my life: Locus of Control and Support for the Welfare State," MENDELU Working Papers in Business and Economics, Mendel University in Brno, Faculty of Business and Economics 2014-46, Mendel University in Brno, Faculty of Business and Economics.

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