Fear of Nuclear War and Intercountry Differences in the Rate of Saving.

This paper demonstrates that, across nineteen OECD countries for 1981-84, a survey-based measure of the perceived likelihood of nuclear war is negatively correlated with the rate of net private saving, holding other determinants of saving constant. The estimates indicate that a 10 percent increase in the fraction of the population that believes a world war is likely is associated with a decline of 4.1 percentage points in the net private saving rate. This finding is consistent with other evidence based on U.S. aggregate time series and cross-individual data suggesting that fear of nuclear war decreases savings. Copyright 1990 by Oxford University Press.