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Do the Rich Save More in Japan? Evidence Based on Two Micro Datasets for the 2000s

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Listed:
  • HORI Masahiro
  • IWAMOTO Koichiro
  • NIIZEKI Takeshi
  • SUGA Fumihiko

Abstract

Using two household surveys for Japan, the Family and Lifestyle Survey (FLS) and the Family Income and Expenditure Survey (FIES), this paper investigates whether the saving rates of richer households (households with higher lifetime wealth) are higher than those of poorer households. The major difficulty in addressing this issue empirically is that a reliable proxy for lifetime wealth is rarely available. We therefore construct a number of proxies from the two surveys. While the estimated relationships are sensitive to the choice of proxy for lifetime wealth, the patterns observed for working age households in Japan are generally consistent with those reported for Western countries: we find significant positive correlations between saving rates and lifetime wealth when we use education and/or the type of occupation (job) as proxies, while the positive correlations disappear when we use consumption as an alternative proxy. We also try alternative proxies original to this study: lagged consumption, household assets, and/or purchase prices and find that the results with these instruments indicate marginally positive correlations between saving rates and lifetime wealth for working age households. We further find that the relationship between saving rates and lifetime wealth differs depending on the life stage of individual households. Older households with higher lifetime wealth appear to be dissaving to some extent, which is more or less consistent with the lifecycle model of consumption.

Suggested Citation

  • HORI Masahiro & IWAMOTO Koichiro & NIIZEKI Takeshi & SUGA Fumihiko, 2015. "Do the Rich Save More in Japan? Evidence Based on Two Micro Datasets for the 2000s," ESRI Discussion paper series 322, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esj:esridp:322
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    References listed on IDEAS

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    1. Horioka, Charles Yuji, 1990. "Why is Japan's household saving rate so high? A literature survey," Journal of the Japanese and International Economies, Elsevier, vol. 4(1), pages 49-92, March.
    2. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    3. Hori, Masahiro & 堀, 雅博 & Iwamoto, Koichiro & 岩本, 光一郎 & Hamaaki, Junya & 濱秋, 純哉 & Murata, Keiko, 2013. "Family and lifestyle survey: objectives, features of the 2011 survey, and questionnaire," CIS Discussion paper series 588, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    4. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    5. Horioka, Charles Yuji, 2010. "The (dis)saving behavior of the aged in Japan," Japan and the World Economy, Elsevier, vol. 22(3), pages 151-158, August.
    6. Sule Alan & Kadir Atalay & Thomas F. Crossley, 2006. "Do the Rich Save More in Canada?," Quantitative Studies in Economics and Population Research Reports 406, McMaster University.
    7. Fumio Hayashi, 1986. "Why Is Japan's Saving Rate So Apparently High?," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 147-234, National Bureau of Economic Research, Inc.
    8. Hori, Masahiro & Iwamoto, Koichiro & Niizeki, Takeshi & Hamaaki, Junya & Murata, Keiko, 2013. "The Second “Family and Lifestyle Survey”: Objectives, Features of the Survey, and Questionnaire," CIS Discussion paper series 607, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    9. Junya HAMAAKI & Masahiro HORI & Koichiro IWAMOTO & Saeko MAEDA & Keiko MURATA & Takeshi NIIZEKI, 2015. "Estimation of Real Assets Holdings by Japanese Households Based on the Microdata from the Family Income and Expenditure Survey:Estimation Methods and Illustrative Tables and Figures(in Japanese)," Economic Analysis, Economic and Social Research Institute (ESRI), vol. 189, pages 65-96, February.
    10. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, March.
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    Cited by:

    1. Iwaisako, Tokuo & 祝迫, 得夫 & Ono, Arito & Saito, Amane & Tokuda, Hidenobu, 2016. "Impact of population aging on household savings and portfolio choice in Japan," HIT-REFINED Working Paper Series 61, Institute of Economic Research, Hitotsubashi University.

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    More about this item

    Keywords

    saving rates; lifetime/permanent income; Japan JEL classifications: D12; D91;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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