How does risk affect saving? Empirical work typically examines the effects of detectible differences in risk within the … data. How these differences affect saving in theoretical models depends on the metric one uses for risk. For labor …-income risk, second-degree increases in risk require prudence to induce increased saving demand. However, prudence is not …

This paper measures risk in the present value of workers’ remaining lifetime earnings. Building upon a common earnings … risk is only moderately correlated with those annual risks and is a much stronger predictor of several major life decisions …. Unlike annual risk, it is often larger for relatively affluent groups. It also has many other covariates, including …

We investigate the major choice of college graduates where we make choice dependent on expected initial wages and … expected real wage growth and expected initial wages across majors. Furthermore, the differences in these expectations appear …

Compensation schemes have been blamed for encouraging excess risk-taking on the part of managers within the financial … limitless. The potential link between compensation and risk behavior is analyzed in this paper. A behavioral experiment with … students shows that unilaterally constructed incentive schemes encourage excess risk-taking. Thus common bonus …

theory suggests that with increasing labor income risk, the reluctance of households to hold stocks increases. We propose to … measure income risk as the observed variation of household income over a five year period. We find that indeed higher income … risk reduces the propensity to invest in stocks. However, when controlling for household heterogeneity as well as …