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Household Saving in Germany: Results of the first SAVE study

  • Axel Borsch-Supan
  • Lothar Essig
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    Germany is an interesting country to study saving among older households since nearly everyone - whether in the middle income bracket or richer - saves substantial amounts in old age. Only households in the lowest quarter of the income distribution spend more between the ages of 60 and 75 than they save. Our paper exploits newly collected data, the first wave of the so-called SAVE panel, specifically collected to understand economic, psychological and sociological determinants of saving. Overall, we find extraordinarily stable savings patterns. More than 40% of German households save regularly a fixed amount. About 25% of German households plan their savings and have a clearly defined savings target in mind. Most of German household saving is in the form of contractual saving, such as saving plans, whole life insurance and building society contracts. This makes the flow of saving rather unresponsive to economic fluctuations, such as income shocks. Most households prefer to cut consumption if ends do not meet. In particular the elderly do not like to use credit cards, and they eschew debt. We suspect large cohort differences and will study them once further waves of the SAVE panel will become available.

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    File URL: http://www.nber.org/papers/w9902.pdf
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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9902.

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    Date of creation: Aug 2003
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    Publication status: published as Wise, David A. (ed.) Analyses in the Economics of Aging. Chicago: University of Chicago Press, 2005.
    Handle: RePEc:nbr:nberwo:9902
    Note: AG
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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    1. Shleifer, Andrei & Summers, Lawrence H. & Bernheim, B. Douglas, 1986. "The Strategic Bequest Motive," Scholarly Articles 3721794, Harvard University Department of Economics.
    2. Borsch-Supan, Axel, 1992. "Saving and Consumption Patterns of the Elderly: The German Case," Journal of Population Economics, Springer, vol. 5(4), pages 289-303.
    3. Börsch-Supan, Axel H. & Reil-Held, Anette & Rodepeter, Ralf & Schnabel, Reinhold & Winter, Joachim, 2001. "The German Savings Puzzle," Munich Reprints in Economics 20236, University of Munich, Department of Economics.
    4. Borsch-Supan, Axel & Reil-Held, Anette & Rodepeter, Ralf & Schnabel, Reinhold & Winter, Joachim, 2001. "The German Savings Puzzle," Research in Economics, Elsevier, vol. 55(1), pages 15-38, March.
    5. Harald Uhlig & Martin Lettau, 1999. "Rules of Thumb versus Dynamic Programming," American Economic Review, American Economic Association, vol. 89(1), pages 148-174, March.
    6. Christopher D. Carroll & Andrew A. Samwick, 1995. "How Important is Precautionary Saving?," NBER Working Papers 5194, National Bureau of Economic Research, Inc.
    7. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
    8. Tullio Jappelli & Franco Modigliani, 1998. "The Age-Saving Profile and the Life-Cycle Hypothesis," CSEF Working Papers 09, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    9. Christopher D. Carroll, 1992. "The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 61-156.
    10. Anette Reil-Held, 1999. "Bequests and Aggregate Wealth Accumulation in Germany," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 24(1), pages 50-63, January.
    11. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    12. Jappelli, Tullio & Pagano, Marco, 1989. "Consumption and Capital Market Imperfections: An International Comparison," American Economic Review, American Economic Association, vol. 79(5), pages 1088-1105, December.
    13. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-26, Sept./Oct.
    14. Hurd, Michael D, 1987. "Savings of the Elderly and Desired Bequests," American Economic Review, American Economic Association, vol. 77(3), pages 298-312, June.
    15. Abel, Andrew B, 1985. "Precautionary Saving and Accidental Bequests," American Economic Review, American Economic Association, vol. 75(4), pages 777-91, September.
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