Fatalism and savings

Joel Shapiro and Stephen Wu

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2011, vol. 40, issue 5, 645-651

Abstract: An individual’s decision about how much to save depends on her perception of how current savings affects future well-being. Fatalistic individuals believe that they have little or no control over future outcomes. We develop a theoretical model linking fatalism to savings and test the predictions using data from the National Longitudinal Survey of Youth (NLSY). The model predicts that fatalism decreases savings for moderately risk averse individuals, but actually increases savings for highly risk averse individuals. Furthermore, fatalism decreases effort in learning about savings and investment options. The empirical results support the theoretical predictions of the model and are robust to the inclusion of a number of additional control variables.

Keywords: Fatalism; Saving; Risk aversion (search for similar items in EconPapers)
JEL-codes: D03 D1 D91 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (13)

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Working Paper: Fatalism and Savings (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:40:y:2011:i:5:p:645-651

DOI: 10.1016/j.socec.2011.05.003

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