Household Savings Decisions Research Articles

Money for him but books for her: The impact of children's gender and adulthood on household savings in China

We examine the impact of chilren's gender and adulthood on household savings decisions in the context of China's demographic transition. Using a nationwide survey dataset, we find that the positive correlation between sons and savings can be attributed to greater investment in education for adult daughters. This result is mainly driven by low-educated and uninsured families. This paper emphasizes the source of gender differences in intra-household resource allocation and sheds light upon the trade-off between savings and human capital investments for offsprings.

ASSESSMENT OF THE RELATIONSHIPS BETWEEN ECONOMIC GROWTH AND SAVINGS

Purpose. The purpose of this study is to develop the evaluation characteristics of the relationship between household savings decisions and macroeconomic growth in order to form a base of identification parameters of effective household financial behavior. Design/methodology/approach. In the article, the authors used the literature review method to justify the importance of implementing the problem of the relationship between savings and economic growth. Based on the trends analysis the authors identified the main features of households’ saving changes during last 17 years, their relationships with changes in GDP, national income and total income of households. The use of correlation-regression analysis made it possible to assess the sensitivity of the impact on the savings of their main elements. Empirical results have been obtained based on official sources of national statistical data and Wold Bank data. Findings. Households play a major role in the economic growth of a nation. Their financial behavior and savings habits can determine the overall economic performance of a country. This paper discusses the elements of household savings, how it affects economic growth, and why it has been on a downtrend lately. It also explores the potential solutions to address this issue and how households can be encouraged to save more for their future. The financial behavior of households in Ukraine has seen significant changes over the past 17 years, and the period of change in priorities between current and deferred consumption is the financial crisis of 2008. Since 2009, seriousness towards savings has been significantly lost. The saving behavior of households in Ukraine is in dissonance with the saving behavior of enterprises and state structures. Households’ savings decisions depend to a small extent on both the absolute size of their income and GDP, as well as their rates of change. Practical implications. The materials presented in the article may be useful for researchers interested in economic growth modeling. Also, the results of this research are of interest to policymakers for creating effective measures of macroeconomic stimulation. Originality/value. In the article, the authors have identified the main regularities of the behavior of households regarding the formation of savings. The changes in the GDP and household income do have not a significant impact on the saving rates both in the short-term and long-term. The changes in the volume of household savings are mainly determined by the dynamics of the volume of net household loans. Households increase indebtedness when the business cycle intensifies (GDP and national income growth). Households in Ukraine are characterized by a high priority of current consumption over deferred (savings).

Antecedents of Savings Behaviour Among Rural Households: A Holistic Approach

The main purpose of this research is to empirically examine the antecedents of household savings behaviour in the Metekele, Beneshangu Guzu state of Ethiopia. In this study, three broader factors (household characteristics, socio-economic variables and institutional variables) influencing savings decisions of households have been identified and examined. This study followed mixed method research design with questionnaire and in-depth interviews as the main instruments. Binary logistic regression has been mainly utilized to analyse the quantitative data. The findings revealed age, educational level, family size, number of livestock unit, income, irrigation utilization, production season, participation in non-farm activities, use of credit, training and education significantly impact savings behaviour. However, sex, religion, marital status, land ownership and expenditure were found insignificant contributors to the model. The government and concerned parties should support more for the decision to save by facilitating and undertaking training on saving options, conducting regular review and monitoring to develop a clear policy on the importance of savings specifically for households on habit of regular savings.

The Saving Behavior of Heterogeneous Households and Credit Constraints: A Decomposition

This paper sheds light on how saving decisions respond to credit constraints. In this paper, we examine the role credit constraints play in the savings decisions of households by focusing on a well-defined set of reasons for their savings. To do so, we classify the saving motives as precautionary saving, saving to finance investments, and saving for retirement. We find that credit-constrained households are less likely to save for retirement and liquidity, while they are more likely to save for investment purposes. Constrained Black households are more likely to save for in- vestment purposes. Discouraged households are more likely to save for investment and less likely to save for retirement purposes. When households are credit-constrained, they use their savings to smooth their consumption rather than to accumulate wealth over time.

Correction to: Household Savings Decisions in Israel’s Child Savings Program: The Role of Demographic, Financial, and Intrinsic Factors

Correction to: Household Savings Decisions in Israel’s Child Savings Program: The Role of Demographic, Financial, and Intrinsic Factors

Household Savings Decisions in Israel’s Child Savings Program: The Role of Demographic, Financial, and Intrinsic Factors

Israel’s Child Development Account (CDA) program, the Savings for Every Child Program (SECP), is universal and automatically enrolls all children under the age of 18, depositing 51 shekels (approximately USD 14) into their accounts every month. Parents can double this savings amount and can choose an investment vehicle for their children’s deposits. The total realized benefits from the SECP depend heavily on parents’ choices. This study examines how demographic, financial, and intrinsic personality characteristics predict household participation in this program. Using a unique data set combining administrative and survey data, we find that household religion/ethnicity, parental education, and financial circumstances were the most significant predictors of household engagement with the SECP. Important differences in program enrollment and participation are observed by household religion/ethnicity. Our study informs potential policy designs of CDA programs, especially in middle- and high-income countries, and have implications for enabling less-educated and religious/ethnic minority households to save for their children’s future.

Rules of Thumb in Household Savings Decisions: Estimation Using Threshold Regression

The rules of thumb offered by financial advisors regarding how much to hold in liquid reserves vary widely and usually imply far greater sums than low-income households save. This paper seeks empirically-grounded insights into the minimum liquidity buffer needed by the average low-income household. First, we document diminishing benefits to liquid savings in terms of the likelihood of experiencing financial hardship. Then, we formalize this relationship with a theory of poverty traps. Finally, to observed data, we fit a regression kink model with an unknown threshold (kink) point that must be estimated. Our key finding is that the threshold point is $2,467 with a 95% confidence interval of $1,814–$3,011 (in 2019 dollars) or roughly 1 month of income for the average low-income household – which is far less than the savings amounts implied by common rules of thumb (typically 3–6 months of income). Theoretical evidence suggests that financial advice based on an empirically-estimated threshold point is welfare enhancing for households with naive perceptions of their probability of experiencing financial problems.

Diferencias de género en los factores asociados al ahorro de los hogares en México

A diferencia de los trabajos que analizan el ahorro suponiendo un hogar unitario, esta investigación se centra en las diferencias en las decisiones de ahorro de los hogares con jefaturas femenina y masculina en México. Los resultados del modelo Tobit muestran que los factores que afectan al ahorro son distintos entre ellos. La escolaridad (primaria y secundaria) y los apoyos gubernamentales no inciden en las tasas de ahorro de las jefaturas masculinas, pero sí en las femeninas. Se confirma la asociación negativa de las horas dedicadas al trabajo doméstico con la tasa de ahorro en los hogares de jefatura femenina.

Empirical Analysis of Household Savings Decisions in Context of Uncertainty: A Cross-Sectional Approach

Most empirical studies of savings behaviour that explicitly take account of the influence of uncertainty consider for identification data that describe the evolution of circumstances observed during an appreciable period of the life-course. Here we report results obtained for a dynamic programming model that has been adapted to permit identification of preference parameters using data observed at a point in time for a given population cross-section. We discuss the advantages of this approach, and our empirical results demonstrate its feasibility in context of contemporary computing technology.

Job Destruction and Propagation of Shocks

We develop and quantitatively implement a dynamic general equilibrium model with labor market matching and endogenous job destruction. The model produces a close match with data job creation and destruction. Cyclical fluctuations in job destruction rate serve to magnify the effects of productivity shock on output, as well as making effects much more persistent. Interactions between household savings decisions and separation decisions in employment relationships play a key role in propagating shocks.

Public Health Insurance and Private Savings

Recent theoretical work suggests that means and asset-tested social insurance programs can explain the low savings of lower income households in the U.S. We assess the validity of this hypothesis by investigating the effect of Medicaid, the health insurance program for low income women and children, on savings behavior. We do so using data on asset holdings from the Survey of Income and Program Participation, and on consumption from the Consumer Expenditure Survey, matched to information on the eligibility of each household for Medicaid. Exogenous variation in Medicaid eligibility is provided by the dramatic expansion of this program over the 1984-1993 period. We document that Medicaid eligibility has a sizeable and significant negative effect on wealth holdings; we estimate that in 1993 the Medicaid program lowered wealth holdings by 17.7% among the eligible population. We confirm this finding by showing a strong positive association between Medicaid eligibility and consumption expenditures; in 1993, the program raised consumption expenditures among eligibles by 5.2%. We also exploit the fact that asset testing was phased out by the Medicaid program over this period to document that these Medicaid effects are much stronger in the presence of an asset test, confirming the importance of asset testing for household savings decisions.