The impact of collectivism on savings behavior: a case study of Mexican-Americans and non-Mexican Latinos

Joelle Saad-Lessler and Karen Richman ()

Review of Economics of the Household, 2014, vol. 12, issue 3, 493-515

Abstract: This interdisciplinary study combines anthropological and economic theories and methods to understand how Mexican-Americans’ collectivist cultural values affect their savings behavior and their preparation for retirement. Mexican-Americans are the fastest growing immigrant group in the United States and they are both younger and expected to live longer than other groups. Yet they are the most insecure in relation to funding retirement. Even when Mexican-American workers are eligible to participate in retirement savings plans at work, they have low participation rates. We analyze data from a Chicago area survey in light of broader anthropological and economic scholarship to argue that Mexican-Americans’ collectivist values influence the choices they make about how to build assets and resources differently from other Latino groups. Latinos are a diverse group by national origin, citizenship and immigration status, characteristics that strongly influence their employment prospects, asset building and retirement savings and security. Financial policy makers need to understand the heterogeneity of financial behavior within the Hispanic community. The collectivist informal economy of Mexican immigrants and their children is at odds with the formal defined contribution retirement savings system, which is geared toward both autonomous individuals and higher-income workers who benefit from the program’s tax deductions. Since these plans penalize participants who withdraw funds before retirement age, they can be deleterious to those who expect both to loan funds to and to borrow money from members of their collectivist social networks. Copyright Springer Science+Business Media New York 2014

Keywords: Mexicans; Immigration; Retirement; Collectivism; Assets; Culture; Rituals; J14; J32; Z13 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s11150-014-9243-z

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