The Saving Behaviour of a Two-person Household

The facts that wives are typically younger than their husbands and that women typically live longer than men imply that wives may have more incentive to save for old age than do husbands. A theoretical model of the determination of household saving and portfolio choice is introduced which takes into account differences in preferences for saving. The most important result is that the level and the composition (portfolio) of saving and the time path of consumption are dependent on the distribution of income within the household.
JEL classification: D 1; D 7     

Who is saving privately for retirement and how much? New evidence for Germany

Due to demographic change, the replacement rates of the German statutory pension scheme will decrease over the next decades. Voluntary savings for retirement will therefore increase in relevance as a method of maintaining one’s standard of living during retirement. This article examines the savings behavior for retirement on an individual level in Germany at the extensive as well as the intensive margin. First, the decision to save in general is analyzed, showing that the main determinants for saving are personal income and disposable household income. Furthermore, it is shown that migrants and individuals living in the Eastern part of Germany turn out to be less likely to have additional private savings. Second, the chosen gross saving rates are analyzed using a Tobit model, a log-normal hurdle model and a Type II Tobit model. The results suggest that the decision to save in general, as well as the saving rate, are independent of each other, leading to a loss of information if only a standard Tobit model is used. For example, higher personal income increases the probability to save for retirement, but decreases the resulting saving rate. Modeling both decisions separately thus, leads to a better understanding of the determinants of saving for old-age.     

Life-Cycle Saving in the United States, 1900–90

This paper examines how the proportion of US saving that represents life-cycle accumulation changed over the last century. As individuals retire earlier and live longer than before, the expected length of male retirement has increased by more than six-fold since 1850. According to life-cycle models of saving, this means that the proportion of lifetime income saved for retirement should rise over time. I estimate that the fraction of lifetime income saved for retirement tripled between 1900 and 1990. In contrast to such an increase in the estimated retirement saving, the actual aggregate household saving rates exhibit a relatively stable long-term tendency during the 20th century. Based on this result, I argue that the relative contribution of the life-cycle saving to US wealth accumulation increased substantially, perhaps two to three times, over the last hundred years.     

Does agricultural cooperative membership influence off-farm work decisions of farm couples?

Membership in agricultural cooperatives may influence intra-household decisions regarding the division of household labor. However, the linkages between cooperative membership and labor allocation remain unexplored. To fill this gap, we examine the impact of cooperative membership on off-farm work decisions of couples engaged in farming, using data collected from 595 banana farmers in China. The recursive bivariate probit model and endogenous-treatment Poisson regression model are employed to address the self-selection bias inherent in cooperative membership. The results show that cooperative membership increases the probability of participating in off-farm work by 38% for husbands and 31% for wives. Having large households reduces the probability of husbands but increases that of wives working off-farm. Cooperative membership is also associated with more time spent on off-farm work and higher earnings for both husbands and wives. Our findings point to the potential of agricultural cooperatives to increase farm couples’ off-farm employment, thus increasing household income and quality of life.     

预期退休年龄的影响因素分析* ——基于CHARLS数据的实证研究

本文基于2011年CHARLS数据,利用Multinominal Logit模型分析了45岁~60岁劳动者个人特征、配偶特征以及家庭特征对他们延迟退休意愿和无休止劳动意愿的影响。本文发现,女性、具有高级职称和农业户口的劳动者更愿意延迟退休,在企业工作、具有农业户口和受教育程度偏低的人倾向于无休止劳动。对延迟退休意愿进行性别差异分析的结果表明,男性延迟退休意愿随着自身受教育程度的提高而增加,随着妻子受教育程度的提高呈现先降低后提高的“U”型趋势。女性的延迟退休意愿随着自身受教育程度的提高而下降,但并不受丈夫的影响。无论是男性还是女性,随着受教育程度的提高,他们无休止劳动的预期均下降。针对以上结论,本文提出了相应的政策建议。     

Does Gender have any Effect on Aggregate Saving? An empirical analysis

This study investigates the effects of gender on aggregate saving. We test the hypothesis that shifts in women's relative income, which can affect their bargaining power within the household, have a discernible impact on household saving and, by extension, gross domestic saving, due to differing saving propensities by gender. The empirical analysis is based on panel data for a set of semi-industrialised economies, covering the period 1975-95. The results indicate that, as some measures of women's relative income and bargaining power increase, gross domestic saving rates rise. The implied gender disparity in saving propensities may be linked to differences in saving motives based on gender roles, and well as divergent experiences of economic vulnerability. These findings suggest the importance of understanding gender differences in planning for savings mobilisation and in the formulation of financial and investment policies.     

中国高储蓄率问题探究——1992-2003年中国资金流量表的分析

本文以国家统计局公布的1992—2003年中国资金流量表为基础,从收入分配和部门储蓄倾向等两个方面对居民、企业和政府等国内三个部门的储蓄率进行了比较分析。我们发现,尽管居民部门的储蓄率最高,但是,自1992年以来,它实际上呈逐步下降趋势,其主要原因在于居民部门获得的劳动报酬、财产收入和再分配收入均有所下降;企业储蓄率呈现缓缓上升趋势,主要原因并不在于企业盈利能力的提高,而在于其主要支出——对居民部门的劳动报酬支出和利息支出长期被稳定在较低的水平上;政府储蓄率在经历了上个世纪的低位徘徊之后,于2000年以后急剧上升,其主要原因在于,通过初次分配和再分配,政府的可支配收入在国民收入的分配中占据了越来越大的份额,同时政府部门的储蓄倾向也在不断提高。本文的政策建议是:为了实现以提高国内消费率为核心的经济发展战略,我国的经济运行应全面转向以改善收入分配结构、提高居民收入为重点的轨道上。为达此目的,加速财政政策向公共财政转型,增加公共支出和对居民的福利支出,在提高劳动生产率的基础上提高企业对劳动者的支付水平,应成为今后我国宏观调控的长期任务。     

Trends in household saving don't justify tax incentives to boost saving

Despite diverse trends in household saving in OECD countries, many governments are introducing tax incentives designed to boost saving by particular groups. Such schemes have been justified by many trends, including increasing income inequality, ageing populations, and greater cross-border competition. It is dangerous, however, to base policy on what is happening to aggregate household saving alone. First, personal saving should be viewed within a lifecycle context. Saving may look inadequate today, but households may already have made plans to redress this in future. Second, data on aggregate saving conceal significant differences between different household groups. Only disaggregation yields reliable inferences on which policy can be based. In particular, it is impossible to assess the consequences of demographic changes without analysis that distinguishes between different generations.
We reassess household saving by computing the evolution of lifetime profiles of consumption, income and saving of different cohorts over time, and then analyse the effect of demographic and other changes. We find little evidence for the assertion that tax incentives to promote national saving are needed now to stave off a future drought in household saving.     

The surprisingly low importance of income uncertainty for precaution

While it is common to use income uncertainty to explain household saving decisions, there is much disagreement about the importance of precautionary saving. This paper suggests that income uncertainty is not an important motive for saving, although households do have other precautionary reasons to save. Using a question from the Survey of Consumer Finances that asks how much households want for precautionary purposes, this paper shows that expressed household preferences, and liquid savings, are much lower than predicted by standard modeling assumptions. Households rarely list unemployment as a reason to save. Perceived income uncertainty does not affect liquid savings or precautionary preferences. Neither does being in an occupation with higher income volatility. Instead, households seem very concerned with expenditure shocks.     

Ownership of individual retirement accounts – an empirical analysis based on SHARE

This paper examines the household retirement saving decisions in what concerns to the ownership of Individual Retirement Accounts (IRAs) in eight European Union (EU) countries. IRAs are more and more seen as an alternative to public pension benefits, which are decreasing. Therefore, understanding the enrolment in IRAs, both the socio-economic factors and over time, is most important. Detailed empirical analysis of the factors that might influence the ownership of IRAs is presented based on Survey of Health Ageing and Retirement in Europe (SHARE), using data from Wave 2 (2006–2007) and Wave 4 (2010–2011). Further, to analyse the impact of legal retirement age in the ownership of IRAs, two subsamples are considered: people aged between 50 and 64 years old (50–64 years) and people aged 65 or over (≥ 65 years). The results suggest that age, years of education, income and ownership of dwelling influence positively and significantly household saving, while number of children, marital status and risk aversion have a negative effect. Marital status and income are not statistically significant for retired people. Policy implications are derived.     

Social security and unsecured debt

In this paper, we use a calibrated life-cycle model to explore quantitatively ways of reducing the burden of social security in a world populated by both optimizing and rule-of-thumb consumers. Social security contributions force young households with upward-sloping income profiles to save a sizeable portion of their income for retirement, when their optimal consumption plan would likely have them either saving little or borrowing. We first use household data to document that young households have accumulated social security contributions that are large relative to debt holdings. Then, using a calibrated life-cycle model, we show that both allowing households to use social security wealth to pay off their debt and exempting young households from social security contributions (but in both cases requiring higher contributions later) mitigate many of the inefficiencies of social security from the perspective of life-cycle financial planning. Specifically, in our preferred experiment, which exempts households whose heads are under 30 from making social security contributions, we find that certainty-equivalent consumption increases by 3.4% for optimizing households and by 3.3% for rule-of-thumb households.     

Reverse Capital Deepening and the Numeraire: a note

The orthodox theory of precautionary saving fails to distinguish risk from uncertainty, and thus assumes the existence of a probability distribution governing an individual's future income prospects. The individual is assumed to be motivated to save by the dispersion in the distribution of future income, and researchers have therefore attempted to correlate saving with income variance. However, the empirical evidence tends to refute any such correlation. This paper proposes a concept of futility to describe actions that cannot affect the external environment, and demonstrates that precautionary saving in the orthodox sense is futile inasmuch as saving cannot alter the dispersion of resources around an expected future value. Despite the inadequacy of orthodox theory, the theory is perpetuated because even futile behaviour is consistent with the neoclassical notion of rationality. The retention of an invalid theory of precaution provides a faulty basis for both empirical research and policy analysis; thus, the present paper suggests an alternative approach to precaution based on the work of Knight and Shackle, in which decisions are made under conditions of uncertainty rather than risk.     

HOUSEHOLD INEQUALITY AND THE LABOR MARKET IN SOUTH AFRICA

There has been very little detailed exploration of the relationship between wage income and household inequality in South Africa despite the relevance of this issue for many contemporary growth and development policy debates. This article is directed at such an analysis. It uses a decomposition of household income inequality by income components to highlight the dominance of wage income in driving overall income inequality. This is followed by a detailed discussion of the distribution of the unemployed across different wage-earning household categories. Many of the unemployed are seen to depend on wage earners within their households, but a significant percentage of the unemployed, especially in rural areas, have no direct link to labor market earners. In such cases, the creation of employment is essential. The conclusion explores policy implications by linking our empirical findings to South African debates over the quality versus the quantity of employment.     

A capable wife: couple’s joint decisions on labor supply and family chores

This study investigates how spousal employment status affects personal employment decisions and the division of family chores. We apply Bresnahan and Reiss (J Econom 48(1):57–81, 1991) empirical cooperative game model to estimate household aggregate preference for a dual-earner family, extending their model to identify the individual preferences of husbands and wives by using the share of family chores as an empirical proxy for individual indirect disutilities. Using data from Taiwan, we show that an average household in the sample does not prefer a dual-earner family. The estimates of individual preferences indicate that this aversion comes mainly from the husbands. These results suggest that the gender gap in labor force participation and earnings has reduced at a faster rate than the social norm change toward the role of women in Taiwan.     

Is there a retirement consumption puzzle in Japan? Evidence from a household panel dataset spanning several years

Using a unique long-run panel of Japanese households, this paper examines the changes in consumption at retirement (‘the retirement-consumption puzzle’). Our analysis shows that households’ expenditure does decline after the retirement of the household head and that changes in household composition at retirement cannot fully account for this decline. Changes in life-style/preferences after retirement also do not appear to explain a salient feature of the expenditure decline, namely, the strong correlation between the magnitudes of the expenditure decline and the income decline upon retirement. On the other hand, our finding that the expenditure decline is larger for households with smaller savings and/or that experienced a large unexpected income decline is broadly consistent with the standard LC/PIH augmented with unexpected shocks, while it does not rule out the possibility that there is a relatively small subset of households that are myopic and lack sufficient saving discipline.     

居民储蓄-准货币之主源

该文的主旨是探求广义货币中之准货币部分与居民储蓄行为间的关系.该文利用分析时序数据的经济计量模型,建立和估计出城乡居民的人均消费行为关系,用以推算居民的储蓄潜力.再用居民储蓄潜力来解释银行城乡储蓄总额,最后用银行城乡储蓄总额来解释广义货币中的准货币部分.建模试验结果表明,居民人均储蓄行为具有相当的规律性,而且储蓄与准货币供给之间也存在着相当稳定的关系.该文还就利率、利率差、收入及收入不确定性等因素对居民储蓄的影响,做了各种模拟试验.     

Do the Rich Save More? Evidence from Canada

This paper provides new evidence on the long‐standing question of whether more affluent households save a larger fraction of their income. The major difficulty in empirically assessing the relationship between incomes and saving rates is to construct a credible proxy for long‐run income—purged of transitory fluctuations and measurement error. The Canadian Family Expenditure Survey provides us with both unusually good data on savings rates and potential predictors with which we can construct reliable long‐run income proxies. Our empirical analysis suggests that the estimated relationship between saving rates and long‐run incomes is sensitive to the predictor used to proxy long‐run income. Nevertheless, our preferred estimates indicate that, except for poorest households (who simply do not save), saving rates do not differ substantially across predicted long‐run income groups.     

Effects of National Health Insurance on precautionary saving: new evidence from Taiwan

In this article, we evaluate the crowd-out effects of the National Health Insurance (NHI) on household precautionary saving in Taiwan. Our analysis differs from existing studies in two respects. First, we do not exclude the households with negative saving that are about 18.9% of the entire sample. Second, we conduct a more complete treatment effect analysis. We estimate both average treatment effect (ATE) and quantile treatment effect (QTE) using the difference-in-differences method. We also partition some covariates (household income and the age of household head) into different groups and estimate the group-wise ATEs and QTEs. While supporting the existing finding that the NHI has negative impact on households saving, our empirical result shows that the QTEs are heterogeneous across saving quantiles, such that higher savers tend to have greater reduction in saving after the NHI is enforced. It is also found that the NHI has greater impact on the households with higher income and those with retiring heads, especially on high savers in these groups.     

SAVINGS AND PERSONAL DISCOUNT RATES IN A MATCHED SAVINGS PROGRAM FOR LOW‐INCOME FAMILIES

The ability to save for future needs is critical to family well‐being and is especially challenging for low‐income families with little extra income and limited access to institutional structures like employment‐based retirement funds or low cost savings mechanisms. Many nonprofits and governments have created new savings vehicles to fill this void. The ability of families to succeed in these programs may depend on their personal discount rates (time preferences). In this paper, we use survey data from a matched savings program and factor analysis to characterize family time preferences in order to predict their influence on savings levels. We find that a single latent factor describing the level of discount rates (rather than other dimensions of time or amount inconsistency) best describes family differences and is significantly related to the ability of families to save within the program. (JEL D91, I30)     

The relationship between income inequality and aggregate saving: an empirical analysis using cross-country panel data

If the rich save more than the poor, an increase in income inequality raises aggregate saving. We investigate whether income inequality is positively related to aggregate saving ratio by estimating a fixed-effect model based on a panel data of 48 countries for the period 1991–2010. We find evidence that aggregate saving ratio increases with income inequality using various inequality measures. In particular, the effect of income distribution on saving is greater and statistically more significant with in financially developed, rich and OECD countries. It suggests that the rich save much more than the poor under advanced financial system and in a rich country. We also find that the relationship between income inequality and saving ratio is closer in the 2000s than the 1990s. This finding may result from financial development and the high income level in the 2000s.