Precautionary Saving and Altruism

Katarina Nordblom ()

No 1997:19, Working Paper Series from Uppsala University, Department of Economics

Abstract: The potential importance of the precautionary motive for saving has been noted in many studies during the last decades. This paper examines the determination of precautionary saving when people have access to intra-family risk sharing. I show that, with uncertain future income, altruism per se can induce time consistent, however, not necessarily ex ante efficient, risk sharing between risk averse spouses. The more altruistic the couple is, the closer is the solution to the efficient one. Also welfare and savings effects from social insurance turn out to be sensitive to assumptions about family structure. For risk sharing couples, the introduction of a compulsory insurance scheme may have substantially smaller effects on welfare and precautionary savings.

Keywords: Precautionary saving; altruism; risk sharing; marriage; intra-family insurance (search for similar items in EconPapers)
JEL-codes: D64 D81 J12 (search for similar items in EconPapers)
Pages: 29 pages
Date: 1997-08-28
New Economics Papers: this item is included in nep-env, nep-mic, nep-pbe and nep-pub
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Working Paper: Precautionary Saving and Altruism (1997)
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