Uncertainty And Personal Savings

The core meaning of the precautionary-saving theory is that people choose savings instead of consuming so that they can protect themselves from the uncertainty in future. People's savings are not only for arranging their fortune in their whole lifetime, but also for taking precautions against and reduce uncertainty in future.By empirically testing with the precautionary-saving model, the correlation between the uncertainty of expenditure in education, housing, and medical service and the savings for Chinese, we find that the Chinese precautionary saving behavior is significant. It is absolutely necessary to establish a sound medical protection system as well as to make further progress in education reforms and housing reforms so that the large size of our savings can be reduced.