Home / Wiki / U / Uncertainty (Economics)

Uncertainty (Economics)

Economics Markets and Financial TheoryUpdated 05 Nov 2026

In economics, uncertainty describes situations in which the possible outcomes, or the chances of each, cannot be known or reliably measured. Frank Knight drew the line between this and measurable risk in 1921, and the idea is explained in full on the Knightian Uncertainty page.

High uncertainty tends to make firms delay investment and households save more, which links it to animal spirits and risk aversion.

Last updated 05 Nov 2026