A note on a new interpretation for the precautionary saving motive

Mario Menegatti

No 2006-EP05, Economics Department Working Papers from Department of Economics, Parma University (Italy)

Abstract: 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.

Keywords: Precautionary saving; Risk aversion; Prudence (search for similar items in EconPapers)
JEL-codes: D11 D81 E21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fmk, nep-mac and nep-upt
Date: 2006
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Persistent link: http://EconPapers.repec.org/RePEc:par:dipeco:2006-ep05

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