What Determines the Saving Behavior of German Households? An Examination of Saving Motives and Saving Decisions

Daniel Schunk ()
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Daniel Schunk: University of Zürich Institute for Empirical Research in Economics, Postal: Blümlisalpstr. 10 CH-8006 Zürich Switzerland

No 07-10, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: Many motives for saving a portion of one’s income co-exist and their relative importance changes over the life-cycle. However, most existing work focuses on only one of those motives and makes simplifying assumptions about the other motives so that they can be relegated to the background. All the more it is important to investigate heterogeneity in saving behavior in the presence of various co-existing saving motives. This paper is concerned with linking heterogeneity in German households’ savings decisions to four coexisting saving motives. First, I find that the importance that households attach to the saving motives is related to how much households save at different life stages. Second, I classify the saver type of the households based on whether they engage in regular savings plans, or rather save irregularly and without a savings plan and I find that saving motives are related to the saver type of the household. The results show that heterogeneity in saving behavior along two dimensions – with respect to the saving rate and the saver type – is systematically related to the importance that households attach to different saving motives. This suggests that policy reforms that change the importance of certain saving motives in the eyes of private households might alter household saving behavior in various ways.

Pages: 51 pages
Date: 2007-05-31
New Economics Papers: this item is included in nep-mac
Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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Citations: View citations in EconPapers (10)

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Working Paper: What Determines the Saving Behavior of German Households? An Examination of Saving Motives and Saving Decisions (2007)
Working Paper: What determines the saving behavior of German households?: an examination of saving motives and saving decisions (2007)
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