Fatalism and Savings

Abstract – Stephen, Wu and Joel, Shapiro

We examine the impact of fatalism, the belief that one has little or no control over future events, on the decision of whether or not to save. We develop a model that predicts that fatalism decreases savings for moderately risk averse individuals, increases savings for highly risk averse individuals, and otherwise has no impact. Furthermore, fatalism decreases effort in learning about savings and investment options. We use data from National Longitudinal Survey of Youth (NLSY) and find general support for the theoretical predictions of the model. The results are robust to the inclusion of a number of additional control variables.

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22. September 2010 by Miguel Barbosa
Categories: Curated Readings, Finance & Investing | Leave a comment

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