Are Young People Becoming More Risk Averse? An Analysis of Factors Contributing to the Rise in Precautionary Savings Among Young Adults.

Since the late 1980s, young people aged 18-34 have increasingly stated that their primary reason for increasing their saving rate has been to protect themselves against uncertain future times. The rate of increase in 'precautionary' savings exceeds that of all other age groups, and has occurred against a backdrop of declining real income, a tepid economic recovery from the Great Recession of 2008-09, a tightened credit environment, and changing household demographics. This study considers the impact of these and other elements on young adults' decisions to save for precautionary purposes, and considers what possible impacts these developments might have for broader consumption and production trends in the U.S economy. [ABSTRACT FROM AUTHOR]