Belke, Ansgar; Dreger, Christian; Ochmann, Richard:

Do Wealthier Households Save More? The Impact of the Demographic Factor

In: DIW Diskussionspapiere = Discussion Papers / Deutsches Institut für Wirtschaftsforschung, (2012) ; Nr. 1211, S. 1-20
ISSN: 1433-0210
Zeitschriftenaufsatz / Fach: Wirtschaftswissenschaften
Fakultät für Wirtschaftswissenschaften » Fachgebiet Volkswirtschaftslehre » Makroökonomik
This paper investigates the relationship between wealth, ageing and saving
behaviour of private households by using pooled cross sections of German consumption
survey data. Different components of wealth are distinguished, as their impact on the
savings rate is not homogeneous. On average, the effect attributed to real estate dominates
the other components of wealth. In addition, the savings rate strongly responds to
demographic trends. Besides the direct impact of the age structure, an indirect effect
arises through the accumulation of wealth. The savings rate does not decrease with age
in a monotonic way, as the permanent income hypothesis suggests. Most prominently,
older households tend to increase their savings in the second half of their retirement
period, probably due to bequest motives and increasing immobility. Given the ongoing
demographic trend, an increase of 1.4 percentage points in the aggregated savings rate
should be expected over the next two decades.