The Elgar Companion to Social Economics
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The Elgar Companion to Social Economics

Edited by John B. Davis and Wilfred Dolfsma

As this comprehensive Companion demonstrates, social economics is a dynamic and growing field that emphasizes the key role that values play in the economy and in economic life. Social economics treats the economy and economics as being embedded in the larger web of social and ethical relationships. It also regards economics and ethics as essentially connected, and adds values such as justice, fairness, dignity, well-being, freedom and equality to the standard emphasis on efficiency. The Elgar Companion to Social Economics brings together the leading contributors in the field to elucidate a wide range of recent developments across different subject areas and topics. In so doing the contributors also map the likely trends and directions of future research. This Companion will undoubtedly become a leading reference source and guide to social economics for many years to come.
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Chapter 25: Saving, Stock Market Investments and Pension Systems

Martha A. Starr


Martha A. Starr Saving, stock market investments and pensions are avenues by which households build up claims to future income and consumption. Such claims are important in a number of respects: they broaden people’s options, reduce their insecurities about material living standards, and enhance their ability to live with dignity in old age. As such, understanding the multiplicity of factors that shape how people save, invest and acquire pension rights is important for understanding their access to well-being and the ways in which social arrangements improve or undercut that access. Saving In the traditional life-cycle view of saving, households maximize utility over the life cycle, resulting in a profile whereby they borrow when young, save in mid-life, and spend down their assets when older; then total household saving is aggregated up from the behavior of independent households. Social economists share the criticisms of this perspective found in other fields, including feminist economics, behavioral economics, post-Keynesian economics, and economic methodology, which include: (1) the representation of households as monolithic, ignoring issues of gender and power within the household (Ferber and Nelson, 1993; Floro and Seguino, 2003); (2) conceptualizing cognition as general-purpose and powerful, rather than an assembly of special-purpose processes subject to limitations (Simon, 1955; Thaler, 1994; Dietz and Stern, 1995); (3) ignoring possibilities that differential saving across the income distribution may push aggregate supply out of balance with aggregate demand (Hobson, 1910; Ryan, 1935; Yunker, 1997; Froud et al., 2001), and (4) more generally, the problem of refuting...

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