Word: brumberg
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Dates: during 1980-1989
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Modigliani's insights have influenced generations of students and policymakers. His "life-cycle" savings theory, developed in the 1950s with Richard Brumberg, is accepted by nearly all experts as a key to understanding thrift. Among other uses, the work offers a yardstick for gauging the impact of different pension systems. The theory suggests, for example, that people will tuck away less when they are guaranteed retirement income. That prediction has been borne out by the experience of Sweden, where savings rates plummeted from 7% to virtually zero after the government embarked in the 1960s on a sweeping pension program...