How Prudent are Consumers?
Using data from the Consumer Expenditure Survey, this paper presents a simple test that provides an explicit estimate of the parameter in the utility function that reflects the strength of the precautionary saving motive, the coefficient of relative prudence. The test yields a fairly precise estimat...
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| Veröffentlicht in: | The Journal of political economy 1993-12, Vol.101 (6), p.1104-1113 |
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| container_title | The Journal of political economy |
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| creator | Dynan, Karen E. |
| description | Using data from the Consumer Expenditure Survey, this paper presents a simple test that provides an explicit estimate of the parameter in the utility function that reflects the strength of the precautionary saving motive, the coefficient of relative prudence. The test yields a fairly precise estimate of a small precautionary motive; in fact, the estimate is too small to be consistent with widely accepted beliefs about risk aversion. The presence of liquidity-constrained households does not appear to explain this finding, and there is some evidence that self-selection of households into risky environments also cannot explain the results. |
| doi_str_mv | 10.1086/261916 |
| format | Article |
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| ispartof | The Journal of political economy, 1993-12, Vol.101 (6), p.1104-1113 |
| issn | 0022-3808 1537-534X |
| language | eng |
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| source | Worldwide Political Science Abstracts; Business Source Complete; Periodicals Index Online; Jstor Complete Legacy |
| subjects | Coefficients Consistent estimators Consumer behavior Consumer economics Consumer expenditure Consumer motivation Consumer spending Consumers Economic models Economic theory Expenditures Household consumption Political Economy Polls & surveys Precautionary motives Precautionary savings Propensity to save Risk aversion Savings Studies Tests Utility functions |
| title | How Prudent are Consumers? |
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