Households save income for various reasons, including the need to plan for the future, the intention to leave a bequest, and the desire to guard against unforeseen expenditures and income fluctuations. Although it is widely believed that prudent individuals engage in precautionary saving, the...

Experimental matching data are used from the 2000 Bank of Italy Survey of Household Income and Wealth (SHIW) and the 2000 wave of the Center for Economic Research (CentER) Savings Survey at Tilburg University to compare the relative frequencies of hyperbolic and exponential discounters. Among...

This paper utilizes a thought experiment conducted by the Bank of Italy to estimate absolute and relative risk aversion along with absolute and relative prudence for a broad cross-section of Italian households. Upper and lower bounds are calculated for each parameter, and comparisons are made...

The conventional measures of absolute and relative risk aversion are appropriate for measuring preferences locally, but because they rely on differential calculus, they cannot accurately capture attitudes towards high-stakes risks involving potentially large changes in wealth. Eisenhauer (2006)...

This paper develops a model of personal saving that includes, unlike previous models appearing in the literature, an explicit role for the Leland-Kimball measure of prudence. Estimation of the model using Bank of Italy survey data suggests that about 20 per cent of total saving is driven by...

The extent to which the moral hazard caused by health insurance represents economic inefficiency has been the subject of much debate. This paper incorporates health status in a model of moral hazard, and finds that seriously ill patients are likely to exhibit greater moral hazard than healthier...