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The Cultural Origin of Saving Behavior

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  • Costa-Font, Joan

    (London School of Economics)

  • Giuliano, Paola

    (University of California, Los Angeles)

  • Özcan, Berkay

    (London School of Economics)

Abstract

Traditional economic interpretations have not been successful in explaining differences in saving rates across countries. One hypothesis is that savings respond to cultural specific social norms. A seminal paper in economics (1) however did not find any effect of culture on savings. We revisit this evidence using a novel dataset, which allows us to study the saving behavior of up to three generations of immigrants in the United Kingdom. Against the backdrop of existing evidence, we find that cultural preferences are an important explanation for cross-country differences in saving behavior, and their relevance persists up to three generations.

Suggested Citation

  • Costa-Font, Joan & Giuliano, Paola & Özcan, Berkay, 2020. "The Cultural Origin of Saving Behavior," IZA Discussion Papers 12987, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12987
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    References listed on IDEAS

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    1. Case Karl E. & Quigley John M. & Shiller Robert J., 2005. "Comparing Wealth Effects: The Stock Market versus the Housing Market," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-34, May.
    2. Higgins, Matthew, 1998. "Demography, National Savings, and International Capital Flows," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 343-369, May.
    3. Oriana Bandiera & Gerard Caprio & Patrick Honohan & Fabio Schiantarelli, 2000. "Does Financial Reform Raise or Reduce Saving?," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 239-263, May.
    4. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," American Economic Review, American Economic Association, vol. 100(5), pages 2060-2092, December.
    5. Paola Giuliano, 2007. "Living Arrangements in Western Europe: Does Cultural Origin Matter?," Journal of the European Economic Association, MIT Press, vol. 5(5), pages 927-952, September.
    6. Cigno, Alessandro & Rosati, Furio C., 1996. "Jointly determined saving and fertility behaviour: Theory, and estimates for Germany, Italy, UK and USA," European Economic Review, Elsevier, vol. 40(8), pages 1561-1589, November.
    7. Christopher D. Carroll & Byung-Kun Rhee & Changyong Rhee, 1994. "Are There Cultural Effects on Saving? Some Cross-Sectional Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(3), pages 685-699.
    8. repec:hal:spmain:info:hdl:2441/432sbils8u9t7qa99cii5psht1 is not listed on IDEAS
    9. Francesco Giavazzi & Ivan Petkov & Fabio Schiantarelli, 2019. "Culture: persistence and evolution," Journal of Economic Growth, Springer, vol. 24(2), pages 117-154, June.
    10. Alessandra Fogli & Raquel Fernandez, 2009. "Culture: An Empirical Investigation of Beliefs, Work, and Fertility," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 146-177, January.
    11. Bisin, Alberto & Verdier, Thierry, 2001. "The Economics of Cultural Transmission and the Dynamics of Preferences," Journal of Economic Theory, Elsevier, vol. 97(2), pages 298-319, April.
    12. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2006. "Does Culture Affect Economic Outcomes?," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 23-48, Spring.
    13. Alberto Alesina & Paola Giuliano, 2015. "Culture and Institutions," Journal of Economic Literature, American Economic Association, vol. 53(4), pages 898-944, December.
    14. John Laitner, 2000. "Structural Change and Economic Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(3), pages 545-561.
    15. Laurence J. Kotlikoff, 1989. "What Determines Savings?," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262611872, April.
    16. Musgrove, Philip, 1979. "Permanent Household Income and Consumption in Urban South America," American Economic Review, American Economic Association, vol. 69(3), pages 355-368, June.
    17. Masson, Paul R & Bayoumi, Tamim & Samiei, Hossein, 1998. "International Evidence on the Determinants of Private Saving," The World Bank Economic Review, World Bank, vol. 12(3), pages 483-501, September.
    18. Edwards, Sebastian, 1996. "Why are Latin America's savings rates so low? An international comparative analysis," Journal of Development Economics, Elsevier, vol. 51(1), pages 5-44, October.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Cultural Origin of Saving Behavior
      by maximorossi in NEP-LTV blog on 2020-07-21 18:00:09

    Citations

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    Cited by:

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    2. Davoli, Maddalena & Rodríguez-Planas, Núria, 2020. "Culture and adult financial literacy: Evidence from the United States," Economics of Education Review, Elsevier, vol. 78(C).
    3. Alessia Aspide & Kathleen J. Brown & Matthew DiGiuseppe & Alexander Slaski, 2023. "Culture & European attitudes on public debt," New Political Economy, Taylor & Francis Journals, vol. 28(4), pages 509-525, July.
    4. F. Cerina & X. Raurich, 2023. "Saving Behaviour and the Intergenerational Allocation of Leisure Time," Working Paper CRENoS 202315, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    5. Richwine, Jason, 2023. "Savings behavior among immigrants and their U.S.-born children: A test of the culture-transplant model," Economics Letters, Elsevier, vol. 231(C).
    6. Li, Logan, 2021. "Political violence and household savings: Evidence from the long-term effects of the Cultural Revolution," The Journal of the Economics of Ageing, Elsevier, vol. 19(C).
    7. Michaela Benzeval & Thomas F. Crossley & Edith Aguirre, 2023. "A symposium on Understanding Society, the UK Household Longitudinal Study: introduction," Fiscal Studies, John Wiley & Sons, vol. 44(4), pages 317-340, December.
    8. Abigail McKnight & Mark Rucci, 2020. "The financial resilience of households: 22 country study with new estimates, breakdowns by household characteristics and a review of policy options," CASE Papers /219, Centre for Analysis of Social Exclusion, LSE.
    9. Christopher Ellis & Jon C. Thompson & Jiabin Wu, 2020. "Labor market characteristics and cultural choice," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1584-1617, September.
    10. Dario Maimone Ansaldo Patti & Pietro Navarra & Giuseppe Sobbrio, 2022. "Insecure Property Rights and Conflicts: How to Solve Them?," Mathematics, MDPI, vol. 11(1), pages 1-32, December.

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    More about this item

    Keywords

    culture; saving;

    JEL classification:

    • Z1 - Other Special Topics - - Cultural Economics
    • D0 - Microeconomics - - General

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