Stanford University

Project Description

Household Savings Research Project

Project Abstract

Personal saving rates vary vastly across countries. In 2006, Chinese households saved a quarter of their disposable income while the U.S. households saved negative 1%. Personal saving has important functions for both the household and the nation's economy. Widely examined factors of people's saving behavior include income, number of dependents, future uncertainty, and borrowing constraints. Yet much of the difference in the level of personal saving across countries remain unexplained after taking into account a rich set of macroeconomic variables. Some economists have proposed that cultural values and customs account for this gap. However, this hypothesis remains inadequately tested. This project examines the importance of cultural backgrounds on people's spending versus saving decisions and tests whether our general assumptions about the frugality of East Asian cultures are true. The project analyzes the effect of cultural origin on the household saving patterns of different immigrants groups over time, and uses responses to surveys to test whether Asian populations tend to hold beliefs that are more favorable towards saving. If cultural roots are important in household saving behavior, reforming the institutional structure will not be enough to encourage people to save more or less.

Surveys released for this project:
Survey of Household Savings 72
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