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Risk and time preferences: saver types

  • Luc Arrondel

    (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris)

  • André Masson

    (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris)

In an extended variant of the life-cycle hypothesis, saving behaviour is shown to depend crucially on the interaction between two preference parameters : γ, which represents risk attitudes (aversion, prudence...), and δ, the rate of time depreciation. Hence, the predictions of four specific accumulation regimes : the Armchair investors (high γ, low δ) ; the Entreprising (low γ, low δ) ; the Hotheads (low γ, high δ) ; and the Short-sighted prudent (high γ, high δ). The Insee "Patrimoine 1997" survey allows to obtain global relative measures of the two preference parameters. An econometric analysis of the amount and composition of wealth shows then that this savers' typology has sizeable explanatory power, with effects as predicted. Ceteris paribus, "armchair investors" accumulate more wealth than other households. Hotheads own less homes and Pep (insurance saving products), short-sighted prudent less (often) stocks, and these two types of savers invest less in long-term saving (whether for housing or retirement) than the other categories.

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Paper provided by HAL in its series PSE Working Papers with number halshs-00590722.

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Date of creation: Sep 2005
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Handle: RePEc:hal:psewpa:halshs-00590722
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