The Effects of A Continuous Increase in Lifetime on Saving

This paper examines the effects on saving of a continuous increase in lifetime and shows that a greater increase in lifetime leads to greater savings. This is because an increase in lifetime is accompanied by uncertainty and because the working‐age cohort whose lifetime is longer saves more than the retired cohort dissaves. This result is tested empirically with cross‐country data, and it is confirmed that an increase in life expectancy has a positive effect on various saving rates.