Does Economic Insecurity Reduce all Types of Expenditures?

Arbeitspapier

The prudence theory predicts that economic insecurity reduces all consumption expenditures. We question this prediction by estimating the effect of economic insecurity on various expenditure items using an Australian longitudinal data set (HILDA) and panel regressions. Our results confirm that total consumption declines in response to greater economic insecurity and that this decline is greater for those with high risk aversion. However, we observe a clear gradient related to the degree of necessity of goods and services: the more necessary the consumption items, the weaker the effect of insecurity.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: GLO Discussion Paper ; No. 1060

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Theory ; Consumer Economics: Empirical Analysis ; Macroeconomics: Consumption; Saving; Wealth
• Subject: Household expenditures ; Economic insecurity ; Prudence

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lepinteur, Anthony ; Yin, Rémi
• Event: Veröffentlichung
• (who): Global Labor Organization (GLO)
• (where): Essen
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/250911
• Last update: 10.03.2025, 11:42 AM CET