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Using the 2007–2009 Survey of Consumer Finances (SCF) panel dataset, this study investigated the relationship between subjective income risks and stock ownership of 2,386 households with a working head before and after the Great Recession. We used subjective income uncertainty as a proxy for subjective income risks. A two-stage least squares (2SLS) estimation with an instrumental variables (IV) approach was used to reduce potential selection bias. The results suggested that households that were more likely to face subjective income uncertainty were less likely to hold stock assets in their portfolios. We confirmed this negative relationship between subjective income risks and stock ownership using tests of robustness. [ABSTRACT FROM AUTHOR]

Using the 2007–2009 Survey of Consumer Finances panel dataset, we investigate whether and how changes in perceived income and saving motives are related to demand for household savings in the United States after the Great Recession. Households that perceive their current income as lower, relative to normal years are less likely to save than those who view that their income is the same as the reference point. This result holds only for those who experienced a significant negative income shock during the Great Recession. Among five major saving motives, saving for an emergency is an important factor in explaining the likelihood of saving. This study suggests that financial planners and educators should pay close attention to the role of households' income perception and saving motives and should account for the resulting potential psychological biases in households' saving decisions. [ABSTRACT FROM AUTHOR]