Psychological, social and economic determinants of saving: comparing recurrent and total savings

Abstract

Saving is of interest to psychologists and economists because of its importance to both the individual and the economy. Economic theories have traditionally acknowledged psychological factors in saving such as self-control, fear of economic uncertainty and pessimism about the economy. Katona (1975) has been particularly influential in suggesting that people's beliefs about the economy mediate their saving. However, subsequent attempts to predict savings using economic and psychological variables have met with limited success. The present study used a wide range of economic, demographic and psychological variables to distinguish between savers and non-savers and to predict recurrent saving and total savings. Two hundred and seventy-nine people completed in-depth surveys of their economic conditions, their social background and a variety of psychological predictors. Discriminant function analysis was used to discriminate between savers and non-savers. A variety of psychological factors discriminated those who save regularly from those who do not. Using multiple regression analysis, both recurrent and total saving were predicted by economic variables, recurrent saving was predicted also by psychological variables and total savings by demographic variables. Implications for the role of psychological factors in saving are discussed.