Location of Repository

Fatalism and Savings

By Wu Stephen and Shapiro Joel


We examine the impact of fatalism, the belief that one has little or no control over future events, on the decision of whether or not to save. We develop a model that predicts that fatalism decreases savings for moderately risk averse individuals, increases savings for highly risk averse individuals, and otherwise has no impact. Furthermore, fatalism decreases effort in learning about savings and investment options. We use data from National Longitudinal Survey of Youth (NLSY) and find general support for the theoretical predictions of the model. The results are robust to the inclusion of a number of additional control variables.fatalism, savings, risk aversion

OAI identifier:

Suggested articles



  1. Angeletos,
  2. (2006). Belief in a Just World and Redistributive Politics,”
  3. (2001). Countering Fatalism: Causal Information
  4. (2001). Explaining Why So Many Households Do Not Save.” Working Paper, Center for Retirement Research,
  5. (2005). Fatalistic Tendencies: An Explanation of Why People Don’t Save,” Contributions to Economic Analysis and Policy 4(1):
  6. (2006). Inattentive Consumers,”
  7. (2005). Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey,”
  8. (2003). Intertemporal Substitution, Risk Aversion, and Economic Performance in a Stochastically Growing Open Economy,”
  9. (2001). Is there a Retirement Savings Puzzle?”
  10. (1997). Preference Parameters and Behavioral Heterogeneity: An Experimental Approach
  11. (2003). Quasi-Hyperbolic Discounting and Retirement,”
  12. (1982). The Belief in a Just World: A Fundamental Delusion.
  13. (2003). The Effects of Financial Education in the Workplace: Evidence from a Survey of Households,”
  14. (2001). The Power of Suggestion: Inertia
  15. (2003). The Role of Information and Social Interactions in Retirement Plan Decisions: Evidence from a Randomized Experiment,”

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.