Savings Motives Research Articles

Development and validation of the Acquiring and Saving Motives Questionnaires: For use in clinical and nonclinical populations.

Our consumer-driven culture has negative impacts for individuals who are vulnerable to clinical hoarding and compulsive shopping. Because of this, there is an ever-present need to have standardized tools to assess why we acquire and save things we might not need. In this article, we present the development of the Acquiring Motives Questionnaire (AMQ) and Saving Motives Questionnaire (SMQ), which were written based on a thorough literature review and consultation with 22 experts in the field. After piloting with two large nonclinical samples, we administered the measures to another large nonclinical sample (N = 535; Mage = 24.4, 74.2% female, 54.6% White) and then a community sample of individuals with hoarding disorder and/or compulsive buying-shopping disorder and controls without any mental health diagnoses (N = 159; Mage = 42.54, 85.5% female, 59.7% White). Confirmatory factor analyses supported a 14-factor model for the AMQ and a 14-factor model for the SMQ. All subscales demonstrated good internal consistency (ω = 0.81-0.96), 2-week test-retest reliability (intraclass correlation coefficient = 0.67-0.83), and convergent, divergent, and criterion validity. The measures also distinguished between controls and individuals with hoarding and/or compulsive buying diagnoses. Findings highlight that acquiring and saving behaviors are both motivated by the pursuit of positive emotions and the avoidance of negative emotions, which is consistent with our theoretical understanding of these clinical issues. Based on our findings, we make suggestions for psychological interventions. (PsycInfo Database Record (c) 2024 APA, all rights reserved).

Do paid maternity leave mandates affect corporate cash holdings?

This study examines whether paid maternity leave laws affect corporate cash holdings. Using a difference-in-differences approach, we find the staggered introduction of these laws significantly reduce firm cash reserves, especially in labor-intensive industries. Further analysis indicates that increased employee productivity post-adoption associates with declining cash holdings, representing a channel linking these laws to precautionary savings motives.

Consumption taxation to finance pension payments

To assess how a permanent shift from financing a public pay-as-you-go pension by direct taxation toward financing it by indirect taxation affects the economy and welfare, we use an overlapping-generations-augmented two-region general equilibrium framework with search frictions on the labor market. The analyzed tax reform partially shifts the tax burden from domestic to foreign producers, lowers marginal costs of domestic production and generates positive domestic macroeconomic effects. Furthermore, the partial postponement of a household’s tax burden to retirement leads to higher savings and increases domestic assets; however after the implementation of the tax reform, the policy-induced increase in consumption costs makes retirees and households close to retirement worse off. Moreover, the increase in domestic net foreign assets implies that consumption of foreign households eventually falls, which contradicts results commonly found in models without an endogenous savings motive.

Familytakāfulpurchase intentions in Bangladesh: the mediating role of attitude and saving motives and the moderating role of religiosity

PurposeThe purpose of this study is to predict family takāful purchase intentions (FTPIs) using an extended theory of planned behavior (TPB) with relevant mediating and moderating factors.Design/methodology/approachThis study is based on a survey of 384 Muslim employees who work in both government and private organizations. This study used partial least square structural equation model (PLS-SEM) for hypothesis testing, predictive relevance and measuring the effect size of the model.FindingsThe study found that attitude (ATT), subjective norms (SN), perceived behavioral control (PBC), saving motives (SM), promotional campaign (PC) and religiosity (RG) directly contribute to the prediction of FTPIs. Furthermore, ATT and SM partially mediate between PC and FTPI. Moreover, RG significantly moderates the association between ATT, SN, SM and FTPI, while RG insignificantly moderates the link between PBC and FTPI.Practical implicationsThis study provides insight into understanding the factors leading to an enhanced understanding of FTPI in a country where the industry is growing very fast. Further, the study suggests informative and persuasive promotions to encourage FTPI in Bangladesh and similar countries.Originality/valueThis study provides insights into previously unaddressed FTPI among Muslim employees in Bangladesh and similar countries. Prior work on determining FTPI has not focused on promotional campaigns and saving motives, and thus, this study has extended TPB to understand the phenomenon.

Sensitivity to Calibrated Parameters

AbstractA common approach to estimation of dynamic economic models is to calibrate a subset of model parameters and keep them fixed when estimating the remaining parameters. Calibrated parameters likely affect conclusions based on the model, but estimation time often makes a systematic investigation of the sensitivity to calibrated parameters infeasible. I propose a simple and computationally low-cost measure of the sensitivity of parameters and other objects of interest to the calibrated parameters. In the main empirical application, I revisit the analysis of life-cycle savings motives in Gourinchas and Parker (2002) and show that some estimates are sensitive to calibrations.

Environmental Responsibility of the Population: Experience of Sociological measurement

The materials of surveys conducted within the framework of the «International Social Survey Programme» in 2020 - 2021 are analyzed. The main attention is paid to identifying the level of environmental responsibility of the Russian population in comparison with other countries participating in the project. On the basis of multidimensional analysis, integrative indicators were calculated that characterize the environmental responsibility of the population by taking into account social attitudes and behavioral practices. It is stated that in Russia the principles of environmental responsibility are relatively weakly expressed. Russians are much less prepared for additional material spending and self-limiting actions in order to preserve the environment. At the same time, the minimum level of involvement of the population in the practices of environmentally responsible behavior is fixed, which is partly due to insufficiently developed infrastructure. It is concluded that, despite the postulation at the state level of the need to form an ecological culture of the population, in Russia, in comparison with other states, low indicators of environmental responsibility are recorded. The factors of environmental responsibility of Russians are considered. The presence of a significant direct correlation between the severity of environmental responsibility attitudes and the personal income of the respondents was revealed. It is noted that in our country there is a feedback between personal income and practices of environmentally responsible behavior, which can be considered as evidence of the important role of the motive for financial savings. Education is considered as the main channel for the formation of environmental responsibility. It is stated that only in Russia there is no statistically significant relationship between the level of education and the components of environmental responsibility. Highly educated Russians, as well as poorly educated compatriots, demonstrate a low level of formation of environmental responsibility attitudes and involvement in environmentally responsible behavior. It is concluded that the implementation of environmental education in modern Russia faces significant problems.

IMPACT OF COVID-19 ON SAVINGS PATTERN

The catastrophic COVID-19 outbreak wreaked devastation on people all around the world. Lockdown disrupted all economic activity, and many people went days without eating a complete square of food. Many migrant workers, especially those working for private sector businesses, were forced to abandon their employment or accept lower wages or go without compensation. Individuals savings were depleted as a result of the income decline since they used their savings to cover expenses during the epidemic. They were compelled to flee their homes without any protection or safety. Therefore, this study is being conducted to evaluate the income, savings, and investment behaviours of persons working for private sector enterprises in the fields of education, transportation, and telecommunication during the pre-COVID-19 and post-unlock periods. KEYWORDS: COVID-19, Households, Income, Savings Motive, Savings Pattern,

Estimation of Consumption Functions Using Savings Motive Hypothesis (SMH)

In this paper a new consumption function is derived based on savings motive hypothesis (SMH). The major theory behind the SMH is that households save part of their income in period 1 and transfer it to period 2. Implying that consumption in period 1 is the addition of autonomous consumption and variable consumption in period 2. The validity of the SMH is tested by using data from India, Kenya, South Africa, Saudi Arabia, UK and USA for the period 1970 to 2018. The data analyses are performed by using World Bank Data and generalized least squares (GLS) method. The paper demonstrates that estimation of the consumption function could be done more accurately by using SMH of the consumption function. The MSH is based on the psychological savings motive theory. Some results in the paper can be used in making both household and national welfare decisions e.g. making use of the short run global marginal propensity to consume that is found to be 0.43.

Housing demolition and financial market investment: evidence from Chinese household data

ABSTRACT This paper estimates the impact of housing demolitions on households’ investment behaviour in financial markets in China using a large microeconomic data set. This study provides new evidence on the effect of demolitions on families’ investment behaviour from a natural experiment created by housing demolition and compensation events. We find that housing demolitions significantly increase households’ participation in risky financial markets. Households’ portfolio choices in responses to demolitions vary substantially across household characteristics. The affected households in urban areas and those with cash compensation are more likely to participate in risky asset markets, while the affected low-income families decrease investment in financial markets. To understand the underlying mechanisms, we propose a framework of how housing demolitions increase households’ financial asset allocation. Our results indicate that changes in precautionary motive for savings and risk preference hold substantial importance.

How and why do the poor save Determinants of saving behaviour of rural poor

This study examined the savings behaviour of rural poor with a focus on the motives of saving and preferred savings mechanisms. One of the major causes of financial distress in lower income groups especially in developing countries has been lack of sustainable saving. The existing literature has mainly focused on the saving capacities of rural poor which is inadequate in explaining the saving behaviour. Building on the existing theories a more systematic view on savings motives and mechanisms preferred by this segment is presented in this research. The results revealed that the poor do not save for a goal and the only motive which significantly increases the likelihood of saving is to reduce the need for credit. Creating a corpus for medical exigencies was a major motive for informal saving. Providing a basic sustenance financial foundation for children was found to be a major motive for saving and this probably is a new finding which needs further research. This research has important implications for policymakers and financial professionals in formulating recommendations or developing financial, business plans.

Transformational Impact of COVID-19 on Savings and Spending Patterns of Indian Rural Households

COVID-19 has spread across the globe at a shocking level and significantly affects the world economy. The pandemic has significantly impacted rural households, the primary workforce for industrialized urban areas, in every sector of rural businesses, including agriculture. Furthermore, the dearth of employment in the primary industry has also adversely influenced rural inhabitants’ livelihood and financial decisions. COVID-19 changed the perception of people regarding their income and expenditure. This study is intended to analyse the transformation of savings and spending of rural households during COVID-19. A questionnaire was developed using a Likert scale to elicit study variables, and the collected data were analysed using structural equation modelling. The results showed that all types of savings had a positive and significant relationship with the savings motive of rural households during COVID-19. Further, customary and spontaneous spending had a positive and significant relationship spending pattern of rural households. Rural inhabitants were interested in compromising their spending and other forms of savings to have more emergency savings. Earlier studies have examined either the savings or the spending pattern of rural households, and studies on both savings and spending by rural households are very few. The present study thus adds to the existing literature in the field.

Navigating through Political Risk in Vietnam: The Role of Corporate Cash Holdings

ABSTRACT This paper investigates the effect of political risk on corporate cash holdings in Vietnam from 2009 to 2018. We show that political risk is positively associated with cash holdings. Our findings are robust to other advanced estimation methods when alternative measures of political risk are considered and after addressing endogeneity caveats by two-stage least square estimation. Further analyses reveal that the positive impact of political risk on cash holdings is more pronounced for financially constrained firms and firms with high institutional ownership. Overall, the findings contribute to the literature on how political risk exposure increases firm cash holdings, which is consistent with the precautionary savings motive of cash.

Analyzing state government spending: balanced budget rules or forward-looking decisions?

We analyze US state government spending behavior with a general intertemporal model allowing for asymmetry in balanced budget rules in a panel data setting. We find no strong evidence for forward-looking behavior in state spending; balanced budget rules are a significant constraint. States with budget rules imposing lighter restrictions are more likely to exhibit habit formation, while those with stricter rules demonstrate asymmetric responses to revenue changes. Evidence for a precautionary savings motive is limited. Balanced budget requirements trigger substantial pro-cyclical spending, possibly amplifying state economic volatility for states with tight fiscal rules, especially after revenue increases.

The Investment Side of College Savings

This paper studies how households make portfolio allocation decisions to save for children's college, and how these decisions affect children's college enrollment and student debt. I first document that more than 85% of households allocate college savings to risky assets, in particular more than 60% to stocks. I also demonstrate that college savings motives explain approximately one-third of stock market participation probability outside of retirement accounts for households with children. My results show that the allocation of college savings to stocks is associated with higher children's college enrollment rates and lower student loan participation rates after controlling for family and student characteristics. Exploiting exogenous variation in the portfolio allocation of 529 accounts, I find that holding a 10% greater share of 529 accounts in stocks during the school years increases the accumulated amount of college savings up to 20% and leads to a higher probability of enrollment in a selective four-year college and a lower student loan participation for 529 account beneficiaries from middle- and high-income households.

How much does schooling disutility matter?

Studies on structural education choice models are often inconsistent in choosing whether and how to include a disutility of education, especially in an environment with risk and wealth inequality. We show that adding a disutility term to the education decision, a human capital investment option, is equivalent to assuming a relationship between wealth, risk, and education. Utility gain from education is increasing in the riskiness of future consumption. A riskier environment further propels an agent to choose the human capital investment option that maximizes future income. If the degree of risk increases heterogeneously across multiple human capital investment options, risk aversion and the precautionary savings motive can compound or negate each other depending on which option has a greater increase in risk.

Macroeconomic Fluctuations with HANK & SAM: an Analytical Approach

Abstract Recently developed HANK models, which combine Heterogeneous Agents and New Keynesian frictions, have had a considerable impact on macroeconomics. However, due to the complexity of such models, the literature has focused on numerically solved models and therefore little is known about their general properties. This paper presents a tractable HANK model that integrates Search and Matching (SAM) frictions in the labor market. The model features an endogenous idiosyncratic earnings risk, which may be procyclical or countercyclical. When this risk is countercyclical, which we argue is the empirically plausible case, there is a downward pressure on real interest rates in recessions due to a precautionary savings motive. We show that in this setting (a) the economy may get stuck in a high-unemployment steady state, (b) the Taylor principle is insufficient to eliminate the local indeterminacy of the intended steady state, and (c) nominal rigidities and inincomplete markets are complementary in terms of amplifying the impact of shocks on the macroeconomy.

Differences Between Savings from Equity Issuance and Savings from Cash Flow

Firms have different choices of using equity issuance and cash flow to save. Empirically, we find three differences between savings from equity issuance and cash flow. First, firms may not increase or decrease the savings rates of equity issuance and cash flow at the same time. Second, the savings rate of equity issuance is higher than that of cash flow. Third, in 1985-2016, the savings rate of equity issuance increases more than that of cash flow. To investigate the differences, we analyze the cash-savings motives from the following perspectives: growth options, financial constraints, and equity overvaluation. Our theory predicts that the savings rate of equity issuance increases in the above three scenarios, whereas the savings rate of cash flow only increases because of financial constraints. Empirical results suggest that the savings motives result in the first difference and the growth of intangible investment causes the second and third differences.

Perceived Precautionary Savings Motives: Evidence from Fintech

We study the spending response of first-time borrowers to an overdraft facility and elicit their preferences, beliefs, and motives through a FinTech application. Users increase their spending permanently, lower their savings rate, and reallocate spending from non-discretionary to discretionary goods. Interestingly, liquid users react more than others but do not tap into negative deposits. The credit line acts as a form of insurance. These results are not fully consistent with models of financial constraints, buffer stock models, or present-bias preferences. We label this channel perceived precautionary savings motives: Liquid users behave as if they faced strong precautionary savings motives even though no observables, including elicited preferences and beliefs, suggest they should.

Perceived Precautionary Savings Motives: Evidence from FinTech

We study the spending response of first-time borrowers to an overdraft facility and elicit their preferences, beliefs, and motives through a FinTech application. Users increase their spending permanently, lower their savings rate, and reallocate spending from non-discretionary to discretionary goods. Interestingly, liquid users react more than others but do not tap into negative deposits. The credit line acts as a form of insurance. These results are not fully consistent with models of financial constraints, buffer stock models, or present-bias preferences. We label this channel perceived precautionary savings motives: Liquid users behave as if they faced strong precautionary savings motives even though no observables, including elicited preferences and beliefs, suggest they should.

Sensitivity to Calibrated Parameters

A common approach to estimation of dynamic economic models is to calibrate a sub-set of model parameters and keep them fixed when estimating the remaining parameters. Calibrated parameters likely affect conclusions based on the model but estimation time often makes a systematic investigation of the sensitivity to calibrated parameters infeasible. I propose a simple and computationally low-cost measure of the sensitivity of parameters and other objects of interest to the calibrated parameters. In the main empirical application, I revisit the analysis of life-cycle savings motives in Gourinchas and Parker (2002) and show that some estimates are sensitive to calibrations.