A New Interpretation for the Precautionary Saving Motive: A Note

This paper proposes a new interpretation for the precautionary saving motive: when future income is uncertain, agents increase saving in order to cause a reduction in the disutility due to uncertainty. Furthermore, the paper shows that the usual necessary and sufficient condition for precautionary saving is the condition ensuring this effect to occur and gives new insights into the relationship between risk aversion indexes and precautionary saving.