Precautionary Savings
예방적 저축
Saving behavior in which households reduce current consumption and accumulate reserves against future income uncertainty. First conceptualized by Keynes as the precautionary motive for holding money, it was given microeconomic foundations through Friedman's permanent income hypothesis and later by Leland (1968) and Kimball (1990) through the theory of prudence. When social safety nets for healthcare, education, and retirement are weak and employment is precarious, households increase precautionary savings at the expense of consumption, a key mechanism invoked to explain the high household saving rates and weak consumer spending observed in East Asian developmental states.
Sources
- Wikipedia (EN) Wikipedia article covering the concept's history from Keynes through Leland (1968) and Kimball (1990), the permanent income hypothesis framework, and empirical findings on precautionary saving behavior.
- rhg.com Rhodium Group report (2024) discussing precautionary savings as one of four primary constraints on China's household consumption alongside low income, inequality, and household debt; notes that China's out-of-pocket health spending and weak social safety net drive precautionary saving.
- piie.com Lardy (2025), Peterson Institute Policy Brief, analyzing how China's expanded but still inadequate social safety net contributes to precautionary saving that holds back private consumption.