Leitura do dia - The effect of future income uncertainty in savings decision

The effect of future income uncertainty in savings decision

Fábio Augusto Reis Gomes^{, a,
a}Ibmec São Paulo, Brazil
Received 4 July 2006; revised 10 April 2007; accepted 2 May 2007. Available online 10 May 2007.

Abstract

This paper analyzes consumption and savings decisions in a two-period consumption setting, supposing that future income is uncertain in the sense of Knight (Knight, F., 1921. Risk, uncertainty, and profit (Boston: Houghton Mi²in)). The results imply that uncertainty averse agents save more than risk averse agents.