Fear of Nuclear War and Intercountry Differences in the Rate of Saving

16 Pages Posted: 23 Apr 2004 Last revised: 29 Aug 2010

See all articles by Joel B. Slemrod

Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business; National Bureau of Economic Research (NBER)

Date Written: December 1988

Abstract

This paper demonstrates that a survey-based measure of the perceived likelihood of nuclear war in a country is negatively correlated with the country's rate of net private saving, holding other determinants of saving constant. This result is established using date on twenty OECD countries for the period 1981-4. The measure of the perceived likelihood of nuclear war is calculated from surveys conducted in each country by the Gallup International Research Institutes. The magnitude of the estimated' effect Is large, suggesting that an increase of 10 percent in the fraction of the population that believes a world war is likely is associated with a decline of 4.1 percentage points in the net private saving rate, This finding is consistent with other evidence based on U.S. aggregate time series end cross-individual data suggesting that fear of nuclear war decreases savings. That proposition has profound implications for the interpretation of the performance of the post-nuclear world economy.

Suggested Citation

Slemrod, Joel B., Fear of Nuclear War and Intercountry Differences in the Rate of Saving (December 1988). NBER Working Paper No. w2801. Available at SSRN: https://ssrn.com/abstract=287736

Joel B. Slemrod (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

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