IDEAS home Printed from https://ideas.repec.org/p/cpb/discus/159.html
   My bibliography  Save this paper

The Precautionary Saving Motive and Wealth Accumulation

Author

Listed:
  • Mauro Mastrogiacomo

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Rob Alessie

    (CPB Netherlands Bureau for Economic Policy Analysis)

Abstract

We quantify the relative importance of the precautionary saving motive in determining wealth accumulation. Puzzling results have appeared on the relative importance of the precautionary motive when this is derived either using a self reported measure of uncertainty about future income rather than observed life-cycle income variation. In this study we show that if one takes into account explicitly the uncertainty of the second income earner results converge using both methods. Precautionary savings account for about 30% of wealth accumulation. However we also claim that obtaining converging results does not necessarily answer the question on the empirical relevance of precautionary savings, as the amounts being saved largely differ among studies due to the country specific incentives to save and to the measure of wealth accumulation.

Suggested Citation

  • Mauro Mastrogiacomo & Rob Alessie, 2010. "The Precautionary Saving Motive and Wealth Accumulation," CPB Discussion Paper 159, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:discus:159
    as

    Download full text from publisher

    File URL: http://www.cpb.nl/sites/default/files/publicaties/download/disc159.pdf
    Download Restriction: no

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpb:discus:159. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/cpbgvnl.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.