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Explaining the postwar pattern of personal saving

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  • Leah M. Cook
  • Alicia H. Munnell

Abstract

Economists spent most of the 1980s trying to explain the decline in personal and national saving. They have supplied a host of possibilities, including the impact of capital gains, a decline in the need for retirement saving, and the impact of slower income growth, among others. None of these candidates, however, provides a convincing explanation for the apparent changing pattern of personal thrift. ; Two potential culprits have received considerably less attention and most probably have played major roles in the decline in the reported personal saving rate: the appreciation of owner-occupied housing in the late 1960s and 1970s, and the funding limitations faced by private pension plans in the 1980s. This article presents an empirical analysis of the extent to which the housing boom and pension funding provisions determined the pattern of saving in the postwar period.

Suggested Citation

  • Leah M. Cook & Alicia H. Munnell, 1991. "Explaining the postwar pattern of personal saving," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 17-28.
    • Handle: RePEc:fip:fedbne:y:1991:i:nov:p:17-28
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    File URL: http://www.bostonfed.org/economic/neer/neer1991/neer691b.pdf
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    References listed on IDEAS

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    1. Leah M. Cook & Richard W. Kopcke & Alicia H. Munnell, 1991. "The influence of housing and durables on personal saving," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 3-16.
    2. Barry Bosworth & Gary Burtless & John Sabelhaus, 1991. "The Decline in Saving: Evidence from Household Surveys," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 183-256.
    3. B. Douglas Bernheim & John B. Shoven, 1988. "Pension Funding and Saving," NBER Chapters, in: Pensions in the U.S. Economy, pages 85-114, National Bureau of Economic Research, Inc.
    4. Robert E. Lipsey & Helen Stone Tice, 1989. "The Measurement of Saving, Investment, and Wealth," NBER Books, National Bureau of Economic Research, Inc, number lips89-1, March.
    5. Lawrence Summers & Chris Carroll, 1987. "Why Is U.S. National Saving So Low?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(2), pages 607-642.
    6. Nicole Ernsberger & Alicia H. Munnell, 1987. "Pension contributions and the stock market," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 3-14.
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    Cited by:

    1. Jonathan S. Skinner, 1996. "Is Housing Wealth a Sideshow?," NBER Chapters, in: Advances in the Economics of Aging, pages 241-272, National Bureau of Economic Research, Inc.

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    Keywords

    Saving and investment;

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