The Impact of the Education Factor on Household Saving

Abstract

Many factors influence the formation of consumer habits, one of the key qualitative variables being the education factor. The article examines the influence of the mentioned factor, both on the example of Georgia for different groups of income levels, and on the basis of comparative analysis between countries. The method of regression analysis is used as a research method. In particular, on the example of Georgia, the two-stage regression model is used. In the first stage, the savings factor is filtered from the influence of other factors. The second models are built for between the residual variable of the first stage equation and the education variable. The panel regression model with fixed period effects and period-weighted parameters is used for comparative analysis between countries. The models built on the example of Georgia do not unambiguously show the importance of the education factor in relation to the variation of the savings rate. In addition, on the studied 12-year time horizon, which is a short-term period for revealing the relationship between the mentioned factors, the education factor shows an inversely proportional impact on the savings rate. A cross-country panel model better identifies long-term factors and shows that increasing years of schooling increases the savings rate. Thus, the research shows that the education factor significantly improves financial decision-making abilities. Increasing choice in financial decisions is an important indicator of economic sustainability. Keywords: savings rate, education, gross national income.