|
| |
| Luigi Ventura |
| |
| ''A note on the relevance of prudence in precautionary saving.'' |
| ( 2007, Vol. 4 No.23 ) |
| |
| |
| The aim of this note is to suggest that prudence, i.e. convexity of marginal utility, can only explain a small share of precautionary savings, which we may define as savings generated by variance in income. Therefore, if we are willing to admit that precautionary savings constitute a sizable share of total savings, other factors should be called for. We present a few examples showing that risk aversion might constitute one such factor. |
| |
| |
| Keywords: |
JEL: D8 - Information, Knowledge, and Uncertainty: General
|
| |
| Manuscript Received : May 30 2007 | | Manuscript Accepted : Jun 17 2007 |
|
