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Issues in the Measurement and Interpretation of Saving and Wealth

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  • Michael J. Boskin
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    Abstract

    Alternative measures of saving are developed and compared to the traditional NIPA estimates. Various data sources and estimation methodologies all conclude that adjustments for net saving in durables, government capital, capital gains and losses, and revaluations are substantial. For example, government capital and durables adjustments raise the NIPA estimate of net national saving in 1985 from 4.7% to 8.8%. New estimates of saving, developed and measured as the change in real net worth based on data from the Federal Reserve Flow of Funds National Balance Sheets, differ substantially from the NIPA estimates. For example, in 1986 and 1987, the NIPA net national saving measure is 1.8% and 1.9%, respectively, whereas my corresponding estimates from FED data are 11.5% and 3.3%. My new estimates of net private saving from FED data average 6.5% for the period 1981-87, versus 11.3% for the 1951-80 period. Net national saving has fallen even further, from an average of 11.2% in 1951-80 to 3.2% in 1981-87. Correspondingly, real private net worth reached 13.4 trillion (in constant 1982 dollars) by 1987, but its rate of growth slowed in the period 1979-87 relative to the postwar average. Various conceptual and measurement issues are discussed. Most important are 1) the appropriate level of aggregation across households of different age and type, sectors of the economy, and types of assets, and 2) improved measures of personal income to include as much currently unrecorded income as possible.

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    File URL: http://www.nber.org/papers/w2633.pdf
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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2633.

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    Date of creation: Jun 1988
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    Publication status: published as "Fifty Years of Economic Measurement: The Jubilee of the Conference of the Conference on Research in Income and Wealth," Studies in Income and Wealth, Vol 54, eds. E. Berndt and J. Triplett, pp. 159-183. Chicago: Universityof Chicago Press, 1991.
    Handle: RePEc:nbr:nberwo:2633

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    1. David, Paul A & Scadding, John L, 1974. "Private Savings: Ultrarationality, Aggregation, and "Denison's Law."," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 225-49, Part I, M.
    2. Hurd, Michael D, 1987. "Savings of the Elderly and Desired Bequests," American Economic Review, American Economic Association, vol. 77(3), pages 298-312, June.
    3. Katz, Arnold J, 1983. "Valuing the Services of Consumer Durables," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 29(4), pages 405-27, December.
    4. Michael J. Boskin & Laurence J. Kotlikoff & Douglas J. Puffert & John B. Shoven, 1987. "Social Security: A Financial Appraisal Across and Within Generations," NBER Working Papers 1891, National Bureau of Economic Research, Inc.
    5. Zvi Bodie & John B. Shoven & David A. Wise, 1988. "Pensions in the U.S. Economy," NBER Books, National Bureau of Economic Research, Inc, number bodi88-1, June.
    6. B. Douglas Bernheim, 1988. "Ricardian Equivalence: An Evaluation of Theory and Evidence," NBER Working Papers 2330, National Bureau of Economic Research, Inc.
    7. 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, June.
    8. Boskin, Michael J, 1982. "Federal Government Deficits: Some Myths and Realities," American Economic Review, American Economic Association, vol. 72(2), pages 296-303, May.
    9. Michael J. Boskin & Marc S. Robinson & John M. Roberts, 1985. "New Estimates of Federal Government Tangible Capital and Net Investment," NBER Working Papers 1774, National Bureau of Economic Research, Inc.
    10. 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.
    11. Boskin, Michael J, 1988. "Consumption, Saving, and Fiscal Policy," American Economic Review, American Economic Association, vol. 78(2), pages 401-07, May.
    12. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
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    Cited by:
    1. David F. Bradford, 1993. "Market Value Vs. Financial Accounting Measures of National Saving," NBER Working Papers 2906, National Bureau of Economic Research, Inc.
    2. Iris Claus & Grant Scobie, 2002. "Saving in New Zealand: Measurement and Trends," Treasury Working Paper Series 02/02, New Zealand Treasury.
    3. Iris Claus & Grant Scobie, 2001. "Household Net Wealth: An International Comparison," Treasury Working Paper Series 01/19, New Zealand Treasury.
    4. Jonathan Skinner & Daniel Feenberg, 1990. "The Impact of the 1986 Tax Reform Act on Personal Saving," NBER Working Papers 3257, National Bureau of Economic Research, Inc.

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