Precautionary Saving from Different Sources of Income : Evidence from Rural Pakistan

Few studies have tried to measure how households in a developing country save from each of the different income sources at their disposal. To help fill that gap, the Author uses five-year panel data to examine how households in rural Pakistan save from each of the seven separate sources of income. The author finds that households save from different sources of income at significantly different marginal rates. For example, the marginal propensity to save from external remittances (0.711) is much higher than that for rental income (0.085). As the precautionary model of saving suggests, the reasons for this relate to uncertainty: income that is more variable, tends to be saved at a higher marginal rate. Faced with incomplete capital, and credit markets, households in rural Pakistan save: for a rainy day" by putting away mainly those sources of income that are more variable, and uncertain.

Bibliographic Details

Main Author:	Adams, Richard H., Jr.
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2002-01
Subjects:	SAVINGS BEHAVIOR, HOUSEHOLD INCOME, RURAL AREAS, RURAL CREDIT, INCOME GAPS, MARGINAL COSTS, REMITTANCES, RENTAL PROPERTY, PRECAUTIONARY PRINCIPLE, INCOME VARIABILITY, CAPITAL-OUTPUT RATIO, CREDIT MARKETS AVERAGE RATE, BASE YEAR, CAPITAL INVESTMENT, CONSUMPTION EXPENDITURE, CONSUMPTION FUNCTION, CONSUMPTION GROWTH, DATA SET, DATA SETS, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DURABLE GOODS, ECONOMIC DEVELOPMENT, ECONOMIC RESEARCH, ECONOMIC REVIEW, ECONOMIC STUDIES, EMPIRICAL RESULTS, EMPIRICAL STUDIES, EMPLOYMENT, EQUATIONS, EXPECTED UTILITY, EXPENDITURES, FARM INCOME, FOOD POLICY RESEARCH, GROWTH RATE, HETEROSKEDASTICITY, HOUSEHOLD DATA, HOUSEHOLD LEVEL, HOUSEHOLD MEMBERS, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HUMAN CAPITAL, INCOME, INCOME COMPONENTS, INCOME DISTRIBUTION, INCOME GROUPS, INCOME INEQUALITY, INCOME QUINTILES, INCOME SOURCE, INCOME SOURCES, INCOMES, INFLATION, INVESTMENT OPPORTUNITIES, LINEAR RELATIONSHIP, MARGINAL PROPENSITY TO CONSUME, MARGINAL PROPENSITY TO SAVE, MARGINAL UTILITY, MEASUREMENT ERROR, MEASUREMENT ERRORS, MEASUREMENT PROBLEMS, MPC, MPS, 0 HYPOTHESIS, PERMANENT INCOME, PERMANENT INCOME HYPOTHESIS, POLITICAL ECONOMY, POSITIVE RELATIONSHIP, POVERTY REDUCTION, PRIVATE SECTOR, PRIVATE SECTOR EMPLOYMENT, REAL RATE, REAL RATE OF INTEREST, REGRESSION ANALYSIS, RISK AVERSION, RURAL HOUSEHOLDS, SAVINGS, SIGNIFICANT DIFFERENCES, SURVEY DATA, UNDERESTIMATES, VALUATION, WEALTH, WEIGHTED AVERAGE,
Online Access:	http://documents.worldbank.org/curated/en/2002/01/1687154/precautionary-saving-different-sources-income-evidence-rural-pakistan http://hdl.handle.net/10986/15752
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