On the substitution between saving and prevention
This work makes a joint analysis of prevention and saving decisions. First we determine the optimal levels of the two variables and we analyze substitution between them. Second we provide some comparative statics results in order to determine the effects on optimal saving and prevention of changes in exogenous present and future wealth and in possible future loss. Finally we introduce insurance into the model and we extend the separation result, derived in the literature which studies the substitution between insurance and saving, to the case where prevention is considered too.
|Date of creation:||2010|
|Contact details of provider:|| Postal: Via J.F. Kennedy 6, 43100 PARMA (Italy)|
Web page: http://economia.unipr.it/de
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Cahiers de recherche
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Cahiers de recherche
8231, Universite de Montreal, Departement de sciences economiques.
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- Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-648, July-Aug..
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- M. Menegatti, 2008. "Optimal prevention and prudence in a two-period model," Economics Department Working Papers 2008-EP03, Department of Economics, Parma University (Italy).
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