Franco Modigliani, newest of Nobel laureates, stood before a crowd of reporters Tuesday, champagne to the left of him, balloons to the right. He is one economist who admits that his economic theory was inspired by an old slogan from a savings bank: "Save it when you need it least. Have it when you need it most."

To those noneconomists assembled in the MIT room on the foggy Charles River, this did not sound like the profound stuff of which prizes are born. It resonated more of Benjamin Franklin than Alfred Nobel.

But, then, it took an Alexander Fleming to see penicillin in the mold and an Archimedes to see physics in the bathtub. Modigliani did not yell "Eureka!" when he read the tagline at the bank, but it does describe his view of human economic behavior.

When the 67-year-old began his work on savings some 30 years ago, most of his peers believed that the rich saved money and the poor didn't. Period. What he showed is that people save when they are rich relative to their own standard income. People, and therefore whole nations of people, save the most in a period of growth.

As he went on in his best teaching style, "People do not want to be poor sometimes and gorge others. They try to smooth things out." Among other things, this desire charts a life-cycle pattern to savings. If people have a full earning year, they will save for a later and leaner one.

If Modigliani soothed this listener, it was not because of what he said about current national deficit-spending: "a disastrous policy which is going to be very costly -- not to me, because I am old, but to you who are very young." It was, rather, his description of individual economic life. He made the people, if not the government, sound as if we were behaving quite rationally.

This is not a universal opinion. In everyday life I have always assumed that most people are wildly emotional when it comes to money in general and planning for old age in specific. We bring to any financial conversation about our old age one actuarial table, a calculator, a Social Security number, a list of pension plans, but also a host of fables of modern life.

It is the fables that occupy a disproportionate amount of space -- the classic story about the man who scrimped for retirement and got hit by a truck on the way back from his farewell party; the story about the woman who had just enough to live comfortably to 75 and went on to live uncomfortably to 90.

Most of us know people who have lived one or another such tale. We have one relative whose life savings were spent in a final illness. We know more than one whose lifetime of denial was squandered at a nursing home. At the same time, we also know about those who retired on a decent income to shrink with it into poverty. These are the ghosts who hover around our own planning sessions.

To add to the emotional imbalance, the important decisions about age usually come upon us at midlife. We are asked to weigh our children's educations against our own old age, the pursuit of current pleasure against the possibility of future pain. We have to figure this out in the face of all the ultimate uncertainties -- life and death, longevity and health.

If most of us dread being old and poor, most of us also dread the idea of postponing life until death. It's a decision- making process absolutely ripe with potential for regret.

In view of all that, how remarkable it is that we do, as Modigliani said, "try to smooth things out." We behave more or less rationally while riding this carousel of emotions. We "plan for uncertainty" as if that were not a contradiction in terms. We attempt to live in both the now and the then. Even, by the way, Modigliani.

The economist who was awakened by a phone call from the Nobel committee at 7 a.m. had a schedule for his tax-free prize of $225,000 by 11 a.m. Some of it will go to plane tickets to Stockholm for his whole family, he said. Some may go to upgrading his sailboat. The rest will go, said this grandfather, "to ease my old age."

"I am not going on a binge," the engaging professor assured the festive crowd. "I will use it gradually. That's what my theory says people will do." And that, remarkably, in the face of every insecurity, mindful of every uncertainty, is what we do.