The importance of precautionary motives in explaining individual and aggregate saving* Page
1 Carnegie-Rochester Conference Series on Public Policy 40 (1994) 59-125 North-Holland The …

One of the key puzzles in understanding saving behavior is not so much why people save-
the title of this session-but why people don't save. According to the familiar life-cycle model …

Several recent studies stress the role of precautionary motives for saving.'Because
households' earnings are uncertain," prudence" may encourage the accumulation of assets …

Micro data studies of household saving often find a significant group in the population with
virtually no wealth, raising concerns about heterogeneity in motives for saving. In particular …

The life-cycle-permanent-income model has been the primary theoretical framework for
research on saving. The basic intuition of the model is that households should smooth …

We solve each household's optimal saving decisions using a life cycle model that
incorporates uncertain lifetimes, uninsurable earnings and medical expenses, progressive …

Most economic analyses of either individual or aggregate savings behavior employ a
version of the life-cycle theory of individual savings. The life-cycle theory is a forward-looking …

Older wealth holders spend down assets much more slowly than predicted by classic life-
cycle models. This paper introduces health-dependent utility into a model with incomplete …

What determines savings? The question is timely and important. The US saving rate is less
than half that of Japan, Germany, and other developed countries, and the imbalance in …

This paper uses the Panel Study of Income Dynamics to provide some of the first direct
evidence that wealth is systematically higher for consumers with predictably greater income …