The precautionary saving literature shows that income uncertainty increases savings and wealth. To estimate the magnitude of this effect, we need a measure of income uncertainty. This paper empirically analyzes subjective income uncertainty in The Netherlands. Data come from a large Dutch...

The hypothesis that, on average, people accurately estimate probabilities in random walk processes is experimentally investigated.Individuals are confronted with a process that starts with $X, and in every stage either goes up or down by $1, with probabilities p and 1 - p respectively.For...

The growing literature on precautionary saving clearly indicates the need for measurement of income uncertainty. In this paper we empirically analyze subjective income uncertainty in the Netherlands. Data come from the Dutch VSB panel. We measure income uncertainty directly by asking questions...

In an ordered response model the observed variable is based upon classifying an unobserved variable into one out of a finite number of intervals forming a dissection of the real line (cf. Amemiya, 1981). This model considers the boundaries of the intervals as (unknown) deterministic parameters,...