Cohort Analysis of Saving Behavior by U.S. Households
The aim of this paper is to shed some light in the decline in personal saving rates in the United States in the 1980s. For a such a purpose the paper analyses the only U.S. data set containing information on consumption and income at the household level: the Consumer Expenditure Surveys (CEX) from 1980 to 1991. Because the CEX is not a panel, most of the analysis is conducted using average cohort techniques. The paper identifies a "typical age profile" for saving rates. Such a profile is "hump shaped" and peaks around age 57. The paper also argues that such a profile was "shifted down" for the cohorts born between 1920 and 1939 relative to the younger and older cohorts considered. These cohorts are the parents of the baby boom generation. The paper also argues that these "cohort effects" can account for a nonneglible proportion of the decline in aggregate saving because these cohorts were, during the 1980s, in the ages when saving rates are typically highest. The result is robust to the consideration of several controls and holds for several definitions of consumption. The only exception is when durable expenditure is considered as saving rather than consumption.
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