Working Paper: NBER ID: w2801
Authors: Joel Slemrod
Abstract: This paper demonstrates that a survey-based measure of the perceived likelihood of nuclear war in a country is negatively correlated with the country's rate of net private saving, holding other determinants of saving constant. This result is established using date on twenty OECD countries for the period 1981-4. The measure of the perceived likelihood of nuclear war is calculated from surveys conducted in each country by the Gallup International Research Institutes. The magnitude of the estimated' effect Is large, suggesting that an increase of 10 percent in the fraction of the population that believes a world war is likely is associated with a decline of 4.1 percentage points in the net private saving rate, This finding is consistent with other evidence based on U.S. aggregate time series end cross-individual data suggesting that fear of nuclear war decreases savings. That proposition has profound implications for the interpretation of the performance of the post-nuclear world economy.
Keywords: nuclear war; saving behavior; psychological factors; OECD countries
JEL Codes: D91; E21; H31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fear of nuclear war (F52) | savings (D14) |
| perceived likelihood of nuclear war (F52) | net private saving rate (D14) |