Health Insurance and Precautionary Saving

Posted: 20 Dec 1998

See all articles by Martha Starr

Martha Starr

American University - Department of Economics

Abstract

Recent studies stress precautionary motives for saving: with uncertain income and health, households may accumulate wealth to guard against lower consumption in the future. This paper examines the relationship between health insurance and savings, using high-quality data on household finances. The precautionary view predicts higher savings among households without insurance, ceteris paribus. I find that insurance does reduce saving, once the endogeneity of coverage is taken into account.

JEL Classification: E21

Suggested Citation

Starr, Martha, Health Insurance and Precautionary Saving. Available at SSRN: https://ssrn.com/abstract=5925

Martha Starr (Contact Author)

American University - Department of Economics ( email )

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