Risk and Saving in Two-Person Households: More Scope for Precautionary Saving
The 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.
|Date of creation:||Aug 2012|
|Publication status:||published as 'Risk and Precautionary Saving in Two-Person Households' in: American Economic Review, 2014, 104 (3), 1040-1046|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
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.:
- Ekern, Steinar, 1980. "Increasing Nth degree risk," Economics Letters, Elsevier, vol. 6(4), pages 329-333.
- Menezes, C & Geiss, C & Tressler, J, 1980. "Increasing Downside Risk," American Economic Review, American Economic Association, vol. 70(5), pages 921-932, December.
- Louis Eeckhoudt & Harris Schlesinger, 2008.
"Changes in Risk and the Demand for Saving,"
CESifo Working Paper Series
2388, CESifo Group Munich.
- L. Eeckhoudt & H. Schlesinger, 2008. "Changes in risk and the demand for saving," Post-Print hal-00326101, HAL.
- EECKHOUDT, Louis & SCHLESINGER, Harris, "undated". "Changes in risk and the demand for saving," CORE Discussion Papers RP 2100, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Matthias Fahn & Ray Rees, 2011. "Household Relational Contracts for Marriage, Fertility and Divorce," CESifo Working Paper Series 3655, CESifo Group Munich.
- L. Eeckhoudt & C. Gollier & H. Schlesinger, 2005. "Economic and financial decisions under risk," Post-Print hal-00325882, HAL.
- Apps,Patricia & Rees,Ray, 2009.
"Public Economics and the Household,"
Cambridge University Press, number 9780521716284, December.
- Davies, James B. & Hoy, Michael, 2002. "Flat rate taxes and inequality measurement," Journal of Public Economics, Elsevier, vol. 84(1), pages 33-46, April.
- Rees, Ray, 1988. "Taxation and the Household," Munich Reprints in Economics 3411, University of Munich, Department of Economics.
- Rothschild, Michael & Stiglitz, Joseph E., 1971. "Increasing risk II: Its economic consequences," Journal of Economic Theory, Elsevier, vol. 3(1), pages 66-84, March.
- Jonathan Parker & Bruce Preston, 2002.
"Precautionary Saving and Consumption Fluctuations,"
NBER Working Papers
9196, National Bureau of Economic Research, Inc.
- Miles S. Kimball, 1989.
"Precautionary Saving in the Small and in the Large,"
NBER Working Papers
2848, National Bureau of Economic Research, Inc.
- Kimball, Miles S, 1990. "Precautionary Saving in the Small and in the Large," Econometrica, Econometric Society, vol. 58(1), pages 53-73, January.
- Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, vol. 35(3), pages 355-369, April.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp6824. 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: (Mark Fallak)
If references are entirely missing, you can add them using this form.