Saving Results of a Budgetary Survey of Engineers

Abstract

T HIS SURVEY was made of the engineers and scientists at the Schenectady, New York, plants of the General Electric Company. It has no connection in any way with the General Electric Company itself and was neither approved nor disapproved by that Company. All the people surveyed are college graduates. About 15 per cent are supervisors or managers. This group is of interest to economists for three reasons. First, their annual incomes, $7,000 to over $20,000 before taxes, are in a bracket that accounts for a large share of the total saving done in this country. Second, these are all professional employees of a large company and their anticipated incomes are well defined and not subject to the extreme fluctuations that are common among self-employed professionals. The study of such a group should allow a good test to be made of Friedman's Permanent Income Hypothesis. In addition, this group is especially useful for such a test because it belongs to an association that conducts an annual salary survey and gives each member a set of curves that shows all salaries of the group as functions of age. They can see from these curves what their expected salaries will be for the rest of their working lives and, therefore, they have an extremely good measure of their permanent incomes. Third, this group can be used to test Duesenberry's Relative Income Hypothesis because it is a small, homogeneous, isolated group that lives in the over-all community but usually is not really a part of it. These people make friends only within their own group, the managerial group, and a certain few white collar groups. They are isolated at work and live apart in their own suburbs. They are, as the song puts it so well, the tickey-tackey people. Their tastes and standards are similar and their incomes and status relative to each other are of great importance. Their incomes are high in relation to others in the area, but their consumption is dependent upon where their incomes stand in relation to others in their small group so their saving pattern should test the Relative Income Hypothesis.