This paper shows that the theory of precautionary saving is isomorphic to the Arrow-Pratt theory of risk aversion, allowing the application of risk aversion knowledge to precautionary saving and optimal choice under risk. A measure of precautionary saving motive analogous to Arrow-Pratt risk aversion is used to establish new propositions and interpret the Dreze-Modigliani substitution effect. The paper establishes the formal similarity between precautionary saving and risk aversion theories. It applies risk aversion results to precautionary saving, explores the consequences of varying absolute prudence, and considers the effects of multiple risks. It also provides a novel interpretation of the Dreze-Modigliani substitution effect, showing that precautionary saving motives can be stronger or weaker than risk aversion depending on the degree of absolute risk aversion. The paper concludes that the theory of precautionary saving is closely related to risk aversion theory, and that the close analogy between the two will continue to be useful in understanding responses to risk.This paper shows that the theory of precautionary saving is isomorphic to the Arrow-Pratt theory of risk aversion, allowing the application of risk aversion knowledge to precautionary saving and optimal choice under risk. A measure of precautionary saving motive analogous to Arrow-Pratt risk aversion is used to establish new propositions and interpret the Dreze-Modigliani substitution effect. The paper establishes the formal similarity between precautionary saving and risk aversion theories. It applies risk aversion results to precautionary saving, explores the consequences of varying absolute prudence, and considers the effects of multiple risks. It also provides a novel interpretation of the Dreze-Modigliani substitution effect, showing that precautionary saving motives can be stronger or weaker than risk aversion depending on the degree of absolute risk aversion. The paper concludes that the theory of precautionary saving is closely related to risk aversion theory, and that the close analogy between the two will continue to be useful in understanding responses to risk.