Financial Hardship and Saving Behaviour: Bayesian Analysis of British Panel Data
We explore whether a protective role for savings against future financial hardship exists using household level panel data. We jointly model the incidence and extent of financial problems, as well as the likelihood of having secured debt and the amount of monthly secured debt repayments, allowing for dynamics and interdependence in both of the two-part outcomes. A two-part process is important given the considerable inflation at zero when analysing financial problems. The model is estimated using a flexible Bayesian approach with correlated random effects and the findings suggest that: (i) saving on a regular basis mitigates both the likelihood of experiencing, as well as the number of, future financial problems; (ii) state dependence in financial problems exists; (iii) interdependence exists between financial problems and secured debt, specifically higher levels of mortgage debt are associated with an increased probability of experiencing financial hardship.
|Date of creation:||Jul 2017|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Martin Browning & Annamaria Lusardi, 1996.
"Household Saving: Micro Theories and Micro Facts,"
Journal of Economic Literature,
American Economic Association, vol. 34(4), pages 1797-1855, December.
- Martin Browning & Annamaria Lusardi, 1995. "Household Saving: Micro Theories and Micro Facts," Department of Economics Working Papers 1995-02, McMaster University.
- Martin Browning & Annamaria Lusardi, 1996. "Household Saving: Micro Theories and Micro Facts," Discussion Papers 96-01, University of Copenhagen. Department of Economics.
- Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
- Annamaria Lusardi & Olivia S. Mitchell, 2013. "The Economic Importance of Financial Literacy: Theory and Evidence," NBER Working Papers 18952, National Bureau of Economic Research, Inc.
- Annamaria Lusardi & Olivia S. Mitchell, 2013. "The Economic Importance of Financial Literacy: Theory and Evidence," CeRP Working Papers 134, Center for Research on Pensions and Welfare Policies, Turin (Italy).
- Crainiceanu, Ciprian M. & Ruppert, David & Wand, Matthew P., 2005. "Bayesian Analysis for Penalized Spline Regression Using WinBUGS," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 14(i14).
- Martin Browning & Thomas F. Crossley, 2001. "The Life-Cycle Model of Consumption and Saving," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 3-22, Summer.
- Martin Browning & Thomas F. Crossley, 2000. "The Life Cycle Model of Consumption and Saving," Social and Economic Dimensions of an Aging Population Research Papers 28, McMaster University.
- Martin Browning & Thomas Crossley, 2001. "The life-cycle model of consumption and saving," IFS Working Papers W01/15, Institute for Fiscal Studies.
- Kennickell, Arthur & Lusardi, Annamaria, 2005. "Disentangling the importance of the precautionary saving motive," CFS Working Paper Series 2006/15, Center for Financial Studies (CFS).
- Guariglia, Alessandra & Rossi, Mariacristina, 2004. "Private medical insurance and saving: evidence from the British Household Panel Survey," Journal of Health Economics, Elsevier, vol. 23(4), pages 761-783, July.
- Alessandra Guariglia & Mariacristina Rossi, 2003. "Private Medical Insurance and Saving: Evidence from the British Household Panel Survey," CEIS Research Paper 39, Tor Vergata University, CEIS.
- Yang Li & Asim Ansari, 2014. "A Bayesian Semiparametric Approach for Endogeneity and Heterogeneity in Choice Models," Management Science, INFORMS, vol. 60(5), pages 1161-1179, May.
- Mark Kazarosian, 1997. "Precautionary Savings-A Panel Study," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 241-247, May.
- Mark Kazarosian, 1993. "Precautionary Savings- A Panel Study," Boston College Working Papers in Economics 247, Boston College Department of Economics.
- Bridges, Sarah & Disney, Richard, 2010. "Debt and depression," Journal of Health Economics, Elsevier, vol. 29(3), pages 388-403, May.
- Richard Disney & Sarah Bridges, "undated". "Debt and depression," Discussion Papers 06/02, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
- Sarah Brown & Pulak Ghosh & Karl Taylor, 2016. "Household Finances and Social Interaction: Bayesian Analysis of Household Panel Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 467-488, 09.
- Brown, Sarah & Ghosh, Pulak & Taylor, Karl, 2014. "Household Finances and Social Interaction: Bayesian Analysis of Household Panel Data," IZA Discussion Papers 8301, Institute for the Study of Labor (IZA).
- Alessandra Guariglia, 2001. "Saving behaviour and earnings uncertainty: Evidence from the British Household Panel Survey," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(4), pages 619-634.
- Brown, Sarah & Taylor, Karl, 2016. "Early influences on saving behaviour: Analysis of British panel data," Journal of Banking & Finance, Elsevier, vol. 62(C), pages 1-14.
- Sarah Brown & Karl Taylor, 2008. "Household debt and financial assets: evidence from Germany, Great Britain and the USA," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 171(3), pages 615-643.
- Smith, Michael & Kohn, Robert, 1996. "Nonparametric regression using Bayesian variable selection," Journal of Econometrics, Elsevier, vol. 75(2), pages 317-343, December.
- Smith, M. & Kohn, R., "undated". "Nonparametric Regression using Bayesian Variable Selection," Statistics Working Paper _009, Australian Graduate School of Management.
- Brown, Sarah & Ghosh, Pulak & Su, Li & Taylor, Karl, 2015. "Modelling household finances: A Bayesian approach to a multivariate two-part model," Journal of Empirical Finance, Elsevier, vol. 33(C), pages 190-207.
- Bei Jiang & Naisyin Wang & Mary D. Sammel & Michael R. Elliott, 2015. "Modelling short- and long-term characteristics of follicle stimulating hormone as predictors of severe hot flashes in the Penn Ovarian Aging Study," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 64(5), pages 731-753, November.
- Julie Le Blanc & Alessandro Porpiglia & Federica Teppa & Junyi Zhu & Michael Ziegelmeyer, 2016. "Household Saving Behavior in the Euro Area," International Journal of Central Banking, International Journal of Central Banking, vol. 12(2), pages 15-69, June.
- Yang, Mingan & Dunson, David B. & Baird, Donna, 2010. "Semiparametric Bayes hierarchical models with mean and variance constraints," Computational Statistics & Data Analysis, Elsevier, vol. 54(9), pages 2172-2186, September.
- Atsushi Yoshida & Alessandra Guariglia, 2002. "Estimating saving functions in the presence of excessive-zeros problems," Econometrics Journal, Royal Economic Society, vol. 5(2), pages 435-456, 06.
- Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769, June.
- Daniel B. Hall, 2000. "Zero-Inflated Poisson and Binomial Regression with Random Effects: A Case Study," Biometrics, The International Biometric Society, vol. 56(4), pages 1030-1039, December.
- Giarda, Elena, 2013. "Persistency of financial distress amongst Italian households: Evidence from dynamic models for binary panel data," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3425-3434.
- Mark Taylor, 2011. "Measuring Financial Capability and its Determinants Using Survey Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 102(2), pages 297-314, June. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp10910. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.