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Saving behaviour and earnings uncertainty: Evidence from the British Household Panel Survey

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.

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Received: 15 June 1999/Accepted: 4 January 2001

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Guariglia, A. Saving behaviour and earnings uncertainty: Evidence from the British Household Panel Survey. J Popul Econ 14, 619–634 (2001). https://doi.org/10.1007/s001480100081

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  • DOI: https://doi.org/10.1007/s001480100081

  • JEL classification: D12, D91, E21
  • Key words: Precautionary saving, uncertainty, earnings variability