A note on a new interpretation for the precautionary saving motive
This paper proposes a new interpretation for the precautionary saving motive: when future income is uncertain, agents increase saving in order to cause a reduction in the disutility due to uncertainty. Furthermore the paper shows that the usual necessary and sufficient condition for precautionary saving is the condition ensuring this effect to occur.
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|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: Via J.F. Kennedy 6, 43100 PARMA (Italy)|
Web page: http://economia.unipr.it/de
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- Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279.
- 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.
- DREZE, Jacques H. & MODIGLIANI, Franco, .
"Cosumption decisions under uncertainty,"
CORE Discussion Papers RP
119, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Menegatti, Mario, 2001. "On the Conditions for Precautionary Saving," Journal of Economic Theory, Elsevier, vol. 98(1), pages 189-193, May.
- A. Sandmo, 1970. "The Effect of Uncertainty on Saving Decisions," Review of Economic Studies, Oxford University Press, vol. 37(3), pages 353-360.
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