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Saving, Thrift, and Capabilities

Autor:
  • Andrés Rius (Universidad de la República, Uruguay)
Resumen:
Thrift: “careful use of money so that it is not wasted”; “careful management especially of money”
Saving: “an amount of something that is not spent or used”, “the amount of money that you have saved especially in a bank over a period of time”, “preservation from danger or destruction”, “the act or an instance of economizing”, 3a plural : money put byb : the excess of income over consumption expenditures —often used in pluralc : a usually specified lower cost —often used in plural
To economists, saving is just postponing consumption. Maximizing behavior may dictate the convenience of saving for one’s future, especially if the institutions of the state, the household, or other “mutuals” cannot be expected to provide sufficient resources to make up for involuntary unemployment, poor health, or to sustain a living during old age. In the greatly simplified world of Neoclassical economic analysis, deciding how much to save (or, at some points, to dissave) would be a matter of (exogenous) preferences and some calculations involving expectations. In any case, the amount of savings over the lifecycle will be residually determined by the utility maximizing consumption level. The inability of individuals to complete the calculations required, or to follow their own plans, and the biases discernible in the expectations that support them, are favorites of behavioral economists as they illustrate the potentially damaging market and individual consequences of bounded rationalities.

 
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