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Precautionary saving is saving (non-expenditure of a portion of income) that occurs in response to uncertainty regarding future income. The precautionary motive to delay consumption and save in the current period rises due to the lack of completeness of insurance markets. Accordingly, individuals will not be able to insure against some bad state of the economy in the future. They anticipate that if this bad state is realized, they will earn lower income. To avoid adverse effects of future income fluctuations and retain a smooth path of consumption, they set aside a precautionary reserve, called precautionary savings, by consuming less in the current period, and resort to it in case the bad state is realized in the future. == Basic concept == Economists have realized significance of precautionary saving long ago. Historically, the precautionary motive for saving has been recognized by economists since the time of John Maynard Keynes.〔Keynes, J. 1930. "Treatise on Money." Macmillan London〕 Moreover, Alfred Marshal stressed the importance of saving to secure against future risks: "The thriftlessness of early times was in great measure due to the want of security that those who made provision for the future would enjoy it". Defining this concept, individuals save out of their current income to smooth the expected consumption stream over time. The impact of the precautionary saving is realized through its impact on current consumption, as individuals defer their current consumption to be able to maintain the utility level of consumption in the future if income drops. Some examples of events that create the need for precautionary saving include health risk, business risk, unavoidable expenditures, and risk of labor income change, saving for retirement and a child's education.〔Carroll, C. and Kimball, M. 2001 "Liquidity Constraints and Precautionary Saving." NBER Working Paper Series 8496,National Bureau of Economic Research, Inc〕 Precautionary savings are intimately associated with investments, if earnings are not used for purchasing commodities and services; there is a probability that the precautionary savings can be invested to generate fixed capital and achieve economic growth.〔Skinner, J. 1987. “Risky Income, Life Cycle Consumption, and Precautionary Savings.” NBER Working Paper 2336, National Bureau of Economic Research, Inc〕 Precautionary saving is different from precautionary savings. Saving is a flow variable quantity, measured in units of currency ''per unit of time'' (such as dollars per year). Conversely, the savings denotes the accumulated stock of funds that is present at a single point of time. A higher rate of precautionary saving would lead to a higher growth in an individual's net worth.〔Leland, H. 1968. “Saving and Uncertainty: The Precautionary Demand for Saving” ''The Quarterly Journal of Economics'' 2: 465-473〕 抄文引用元・出典: フリー百科事典『 ウィキペディア（Wikipedia）』 ■ウィキペディアで「Precautionary savings」の詳細全文を読む スポンサード リンク
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