| Abstract: | The Ricardian Equivalence Theory claims that an increase in government's budget deficit is exactly offset by an equivalent increase in current private saving, that people anticipate higher taxes in the future as a result of the present deficit, and save more now. This study surveys two random samples of households in Halifax, Canada, to investigate if they actually behave this way. The result of the survey suggests that people pay little attention to government's budget deficits in deciding their own savings. Economists tend to disregard results of questionnaire surveys on the ground that people may not be conscious of their decision process. Drawing from the psychology literature, this article argues that this objection does not apply to the key questions and responses in this survey. |
