Income Smoothing and Consumption Smoothing

Jonathan Morduch

Journal of Economic Perspectives, 1995, vol. 9, issue 3, 103-114

Abstract: One way that risk-averse households protect consumption levels is to borrow and use insurance mechanisms. Another way, common in low-income economies, is to diversify economic activities and make conservative production and employment choices. Households thus tend toward limiting exposure only to shocks that can be handled with available credit and insurance. Typically, both types of mechanisms are studied independently but much more can be learned by studying them together. First, we obtain a more complete picture of risks, costs, and insurance possibilities. Second, it opens the way to considering biases in standard tests of credit and insurance.

JEL-codes: O12 (search for similar items in EconPapers)
Date: 1995
Note: DOI: 10.1257/jep.9.3.103
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Citations: View citations in EconPapers (723)

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Related works:
Working Paper: Income Smoothing and Consumption Smoothing (1995)
Working Paper: Income Smoothing and Consumption Smoothing (1995)
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