Abstract

http://ssrn.com/abstract=2041160
 


 



The Precautionary Savings Motive and Household Savings


Mauro Mastrogiacomo


De Nederlansdche Bank (DNB); VU University Amsterdam - Faculty of Economics and Business Administration

Rob J.M. Alessie


University of Groningen; Netspar; Tilburg University - Center for Economic Research (CentER)

February 24, 2012

Netspar Discussion Paper No. 02/2012-009

Abstract:     
We quantified the relative importance of the precautionary motive in determining savings. Existing empirical evidence suggests that the impact of precautionary savings is small if one uses a subjective measure of uncertainty about next year income. However, other studies use an ‘objective’ method to proxy for income uncertainty by exploiting life-cycle income variation. These studies find a large impact of precautionary savings. These contradictory results may be either suggestive of methodological shortcomings or the result of institutional differences between countries. We refined the subjective method by taking into account the uncertainty as perceived by the second income earner. We then apply the ‘objective’ and ‘subjective’ method to the same dataset and obtain similar results: the subjective and objective methods suggest that precautionary savings account for approximately 30% of savings. Obtaining converging results does not necessarily determine the empirical relevance of precautionary savings if studies from different countries are compared.

Number of Pages in PDF File: 33

Keywords: precautionary savings, income uncertainty

JEL Classification: D12, D91, E21

working papers series





Download This Paper

Date posted: April 17, 2012  

Suggested Citation

Mastrogiacomo, Mauro and Alessie, Rob J.M., The Precautionary Savings Motive and Household Savings (February 24, 2012). Netspar Discussion Paper No. 02/2012-009. Available at SSRN: http://ssrn.com/abstract=2041160 or http://dx.doi.org/10.2139/ssrn.2041160

Contact Information

Mauro Mastrogiacomo (Contact Author)
De Nederlansdche Bank (DNB) ( email )
PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands
VU University Amsterdam - Faculty of Economics and Business Administration ( email )
De Boelelaan 1105
Amsterdam, 1081HV
Netherlands
+31(0)20 444 6037 (Phone)
+31(0)20 444 6004 (Fax)
Rob J.M. Alessie
University of Groningen ( email )
P.O. box 800
9700 AV Groningen
Netherlands
050-3637240 (Phone)
HOME PAGE: http://members.chello.nl/~r.j.m.alessie
Netspar
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
HOME PAGE: http://www.netspar.nl
Tilburg University - Center for Economic Research (CentER)
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
Feedback to SSRN


Paper statistics
Abstract Views: 480
Downloads: 78
Download Rank: 191,073

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.344 seconds