Abstract
For the first time, this paper uses a panel data set, the British Household Panel Survey, to analyse saving behaviour in Britain. One objective is to test the precautionary saving hypothesis, according to which households save to self-insure against uncertainty. Our results show that in accordance with this hypothesis, various measures of uncertainty based on earnings variability have a statistically significant effect on households’ saving decisions. Moreover, in accordance with the life cycle model, households save more if they expect their financial situation to deteriorate.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Alessie R, Lusardi A (1997) Saving and Income Smoothing: Evidence from Panel Data.European Economic Review41:1251–1279
Baltagi B (1995)Econometric Analysis of Panel Data.Wiley, Chichester
Banks J, Blundell R, Brugiavini A (1999)Risk Pooling, Precautionary Saving and Consumption Growth. Working Paper No. W99/19, Institute for Fiscal Studies
Banks J, Dilnot A, Low H (1994) The Distribution of Wealth in the UK. Commentary No. 45, Institute for Fiscal Studies
Browning M, Lusardi A (1996) Household Saving: Micro Theories and Micro Facts.Journal of Economic Literature34:1797–1855
Carroll C, Samwick A (1997) The Nature of Precautionary Wealth.Journal of Monetary Economics40:41–71
Carroll C, Samwick A (1998) How Important is Precautionary Saving?Review of Economics and Statistics80:410–419
Dardanoni V (1991) Precautionary Savings under Income Uncertainty: A Cross-Sectional Analysis.Applied Economics23:153–160
Dynan K (1993) How Prudent are Consumers?Journal of Political Economy101(6):1104–1113
Friedman M (1957)A Theory of the Consumption Function.Princeton University Press, Princeton
Guariglia A, Rossi M (2001) Consumption, Habit Formation, and Precautionary Saving: Evidence from the British Household Panel Survey.Oxford Economic Papers (forthcoming)
Guiso L, Jappelli T, Terlizzese D (1992) Earnings Uncertainty and Precautionary Saving.Journal of Monetary Economics30:307–337
Kazarosian M (1997) Precautionary Savings- A Panel Study.Review of Economics and Statistics79(2):241–247
Kuehlwein M (1991) A Test for the Presence of Precautionary Saving.Economics Letters37:471–475
Lusardi A (1997) Precautionary Saving and Subjective Earning Variance.Economics Letters57:319–326
Lusardi A (1998) On the Importance of the Precautionary Saving Motive.American Economic Review Papers and Proceedings88(2):449–453
McDonald J, Moffitt R (1980) The Uses of Tobit Analysis.Review of Economics and Statistics62:318–321
Merrigan P, Normandin M (1996) Precautionary Saving Motives: An Assessment from UK Time Series of Cross-Sections.Economic Journal106:1193–1208
Miles D (1997) A Household Level Study of the Determinants of Income and Consumption.Economic Journal107:1–25
Modigliani F, Brumberg R (1954) Utility Analysis and the Consumption Function: An Interpretation of the Cross-Section Data. In: Kurihara K (ed)Post-Keynesian Economics.Rutgers University Press, New Brunswick
Newey W (1987) Efficient Estimation of Limited Dependent Variable Models with Endogenous Explanatory Variables.Journal of Econometrics36:231–250
Schmidt-Hebbel K, Serven L (1997)Saving across the World. Puzzles and Policies. Discussion Paper No. 354, The World Bank
Taylor A (1994) Appendix: Sample Characteristics, Attrition and Weighting. In: Buck N, Gershuny J, Rose D, Scott J (eds)Changing Households: The British Household Panel Survey 1990–1992.ESRC Research Center on Micro-Social Change, University of Essex
Taylor M (ed) (1999)British Household Panel Survey User Manual Volume A: Introduction Technical Reports and Appendices.ESRC Research Center on Micro-Social Change, University of Essex
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2003 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Guariglia, A. (2003). Saving behaviour and earnings uncertainty: Evidence from the British Household Panel Survey. In: Zimmermann, K.F., Vogler, M. (eds) Family, Household and Work. Population Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-55573-2_8
Download citation
DOI: https://doi.org/10.1007/978-3-642-55573-2_8
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-62439-1
Online ISBN: 978-3-642-55573-2
eBook Packages: Springer Book Archive