Human Capital Risk and Family Co-Insurance


To understand the impact of intra-household co-insurance consumption commitments and precautionary saving


The goal of this pilot project is to understand the impact of intra-household coinsurance on consumption commitments and precautionary saving. A precautionary savings motive implies that people will spend more and save less when they face lower risks. In general, this effect is hard to detect since there is little variation in risk that is both large and exogenous. Consequently, research attempting to identify precautionary saving has generally yielded conflicting or insignificant effects. For example Dynan (1993) finds an extremely small effect of precautionary savings while Carroll and Samwick (1998) find a substantial one. This pilot will use a novel identification technique to attempt to look for precautionary saving.

Funded By: 
Award Dates: 
July 1, 2004 - June 30, 2005
PARC Grant Year: 
Year 11