uncertainty about future income triggers saving because of loss aversion. We extend their theoretical analysis to also consider … the internal margin, i.e., the strength, of loss aversion, and empirically study the relation between income risk …, experimentally elicited loss aversion and precautionary savings. We do so using a sample of 640 individuals from the low-income …

This paper empirically examines the behavioral precautionary saving hypothesis that uncertainty about future income … empirically study the relation between income risk, experimentally elicited loss aversion, and precautionary savings. We do so … using a sample of 640 individuals from the low-income population of Bogotá, characterized by limited financial education and …

significant. The methodology of separating and estimating qualitative responses to income changes as in economic crises revealed … that many of the existing income effects are qualitative responses. As a key result, the price elasticity of −1 …