Precautionary and Entrepreneurial Saving - New Evidence from German Households

Konferenzbeitrag

Various studies have interpreted a positive correlation between income risk and wealth as evidence for large precautionary savings. However, the high estimates emerged from pooling non-entrepreneurs and entrepreneurs without controlling for heterogeneity. This paper provides evidence for Germany based on representative panel data including private wealth balance sheets. Entrepreneurs, who face high income risk, hold more wealth than employees, but it is shown that this is not due to precautionary motives. They may rather save for old age, as they are usually not covered by statutory pension insurance. The analysis accounts for endogeneity of entrepreneurial choice and heterogeneous risk attitudes.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Income Risk, Savings and Intergenerational Links ; No. A14-V2

Classification and Topics

• Classification: Wirtschaft ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Consumer Economics: Empirical Analysis ; Macroeconomics: Consumption; Saving; Wealth
• Subject: precautionary saving ; precautionary wealth ; entrepreneurship ; risk aversion

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fossen, Frank M. ; Rostam-Afschar, Davud
• Event: Veröffentlichung
• (who): Verein für Socialpolitik
• (where): Frankfurt a. M.
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/37358