The Decline in Household Saving: What Can We Learn from Survey Data?
WP#2005-15
Abstract
We examine the saving decline from the perspective of microeconomic survey data on the wealth position of American households. Can the surveys provide information on the nature and causes of the saving decline that are not evident in the macroeconomic information? The analysis concentrates on data obtained from six Surveys of Consumer Finances (SCF) covering the period of 1983-2001. The SCF had a panel dimension only in the 1983-89 period.
We conclude that the 1983-89 panel survey is a very valuable, but often ignored, exercise in measuring saving behavior. It is particularly instructive in demonstrating the heterogeneous nature of saving behavior and the dominant role of high-income households. Unfortunately, the panel component of the survey was discontinued after 1989. We conclude that cohort-based estimates of saving that can be derived from successive rounds of the SCF cross-section are not effective substitutes for a panel survey. The most substantial opportunity to improve our knowledge of the reasons for the decline in household saving would be to repeat the 1989 exercise by re-interviewing a portion of the households in each SCF survey.
For executive summary in PDF
For full paper in PDF
Barry Bosworth is a Senior Fellow in Economic Studies at The Brookings Institution. Lisa Bell is a research assistant at The Brookings Institution. The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) to the Center for Retirement Research at Boston College (CRR). The findings and conclusions are solely those of the authors and do not represent the views of SSA, any agency of the Federal Government, The Brookings Insitute or the Boston College Center for Retirement Research.