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Precautionary Saving and Altruism

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  • Nordblom, K.

Abstract

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.

Suggested Citation

  • Nordblom, K., 1997. "Precautionary Saving and Altruism ," Papers 1997-19, Uppsala - Working Paper Series.
  • Handle: RePEc:fth:uppaal:1997-19
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    References listed on IDEAS

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    1. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
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    Cited by:

    1. Enrique Alberola & Rodrigo César Salvado, 2006. "Banks, remittances and financial deepening in receiving countries. A model," Working Papers 0621, Banco de España;Working Papers Homepage.

    More about this item

    Keywords

    SAVINGS ; ALTRUISM ; RISK ; MARRIAGE ; INSURANCE ; FAMILY;

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • 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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