@techreport{NBERw5194,
 title = "How Important is Precautionary Saving?",
 author = "Christopher D. Carroll and Andrew A. Samwick",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "5194",
 year = "1995",
 month = "July",
 URL = "http://www.nber.org/papers/w5194",
 abstract = {We estimate the fraction of the wealth of a sample of PSID respondents that is held because some households face greater income uncertainty than others.  We first derive an equation characterizing the theoretical relationship between wealth and uncertainty in a buffer-stock model of saving.  Next, we estimate that equation using PSID data; we find strong evidence that households engage in precautionary saving.  Finally, we simulate the wealth distribution that would prevail if all households had the same uncertainty as the lowest-uncertainty group.  We find that between 39 and 46 percent of wealth in our sample is attributable to uncertainty differentials across groups.},
}