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Household Saving Behaviour in New Zealand: A Cohort Analysis




This paper seeks to improve our understanding of household saving behaviour. It is based on an analysis of unit record data from March years 1984 to 1998 taken from the Household Economic Survey (HES). There are limitations of the data set but it provides the only available estimates of income and expenditure, from which saving is estimated as a residual. The HES is a series of cross-sectional surveys rather than a true panel, so we construct synthetic cohorts rather than tracking individual households. We use a range of regression models to separate out the effect of age, birth-year cohort and year on saving rates. The typical age profile for savings is hump-shaped, peaks around age 57 and does not become negative at older ages. Such a profile appears to have shifted down for the cohorts born between 1920 and 1939 relative to the younger and older cohorts studied. This pattern of cohort effects is robust to the inclusion of conditioning variables and to the trimming from the sample of households with either negative or very large ratios of savings to consumption. Preliminary investigation supports the hypothesis that changes in the economic and policy environment help explain the different saving behaviour of different birth cohorts. Tentative results suggest that more favourable environments are associated with lower rates of lifetime saving, although more research is needed to confirm this finding.

Suggested Citation

  • John K Gibson & Grant M Scobie, 2001. "Household Saving Behaviour in New Zealand: A Cohort Analysis," Treasury Working Paper Series 01/18, New Zealand Treasury.
  • Handle: RePEc:nzt:nztwps:01/18

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    References listed on IDEAS

    1. Verbeek, Marno & Nijman, Theo, 1992. "Can Cohort Data Be Treated as Genuine Panel Data?," Empirical Economics, Springer, vol. 17(1), pages 9-23.
    2. Jagadeesh Gokhale & Laurence J. Kotlikoff & John Sabelhaus, 1996. "Understanding the Postwar Decline in U.S. Saving: A Cohort Analysis," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 315-407.
    3. Iris Claus & Grant Scobie, 2001. "Household Net Wealth: An International Comparison," Treasury Working Paper Series 01/19, New Zealand Treasury.
    4. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    5. Jeff Borland, 2000. "Economic Explanations of Earnings Distribution Trends in the International Literature and Application to New Zealand," Treasury Working Paper Series 00/16, New Zealand Treasury.
    6. Paxson, Christina, 1996. "Saving and growth: Evidence from micro data," European Economic Review, Elsevier, vol. 40(2), pages 255-288, February.
    7. Angus Deaton & Christina Paxson, 2000. "Growth and Saving Among Individuals and Households," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 212-225, May.
    8. Haddad, Lawrence, 1999. "The income earned by women: impacts on welfare outcomes," Agricultural Economics, Blackwell, vol. 20(2), pages 135-141, March.
    9. Orazio P. Attanasio, 1998. "Cohort Analysis of Saving Behavior by U.S. Households," Journal of Human Resources, University of Wisconsin Press, vol. 33(3), pages 575-609.
    10. Orazio P. Attanasio, 1993. "A Cohort Analysis of Saving Behavior by U.S. Households," NBER Working Papers 4454, National Bureau of Economic Research, Inc.
    11. Orazio P. Attanasio & Hilary Williamson Hoynes, 2000. "Differential Mortality and Wealth Accumulation," Journal of Human Resources, University of Wisconsin Press, vol. 35(1), pages 1-29.
    12. Shorrocks, A F, 1975. "The Age-Wealth Relationship: A Cross-Section and Cohort Analysis," The Review of Economics and Statistics, MIT Press, vol. 57(2), pages 155-163, May.
    13. Jappelli, Tullio, 1999. "The Age-Wealth Profile and the Life-Cycle Hypothesis: A Cohort Analysis with Time Series of Cross-Sections of Italian Households," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(1), pages 57-75, March.
    14. OR Attanasio & J Banks, 2001. "The assessment: household saving - issues in theory and policy," Oxford Review of Economic Policy, Oxford University Press, vol. 17(1), pages 1-19, Spring.
    15. Caballero, Ricardo J, 1991. "Earnings Uncertainty and Aggregate Wealth Accumulation," American Economic Review, American Economic Association, vol. 81(4), pages 859-871, September.
    16. Haddad, Lawrence, 1999. "The income earned by women: impacts on welfare outcomes," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 20(2), March.
    17. Orazio Attanasio & James Banks, 1998. "Trends in household saving: a tale of two countries," IFS Working Papers W98/15, Institute for Fiscal Studies.
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    Cited by:

    1. Touhami ABDELKHALEK & Florence ARESTOFF & Najat EL MEKKAOUI DE FREITAS & Sabine MAGE-BERTOMEU, 2012. "Les Déterminants De L’Épargne Des Ménages Au Maroc : Une Analyse Par Milieu Géographique," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 35, pages 195-214.
    2. repec:dau:papers:123456789/12164 is not listed on IDEAS
    3. Guyonne Kalb & Rosanna Scutella, 2004. "Wage and employment rates in New Zealand from 1991 to 2001," New Zealand Economic Papers, Taylor & Francis Journals, vol. 38(1), pages 21-47.
    4. Dmitry Kulikov & Karsten Staehr, "undated". "Microeconometric analysis of household saving in Estonia: income, wealth, financial exposure," Bank of Estonia Working Papers wp2007-8, Bank of Estonia, revised 03 Feb 2015.
    5. Aneta Risteska & Kosta Sotiroski & Miroslav Gveroski & Tatjana Spaseska & Fanka Risteska,, 2014. "Analysis Of Saving With The Population Of Republic Of Macedonia-Conditions And Perspectives," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 23-31, April.
    6. Christopher Ball & John Creedy, 2014. "Population ageing and the growth of income and consumption tax revenue," New Zealand Economic Papers, Taylor & Francis Journals, vol. 48(2), pages 169-182, August.
    7. Grant M Scobie & John K Gibson, 2003. "Household Saving Behaviour in New Zealand: Why do Cohorts Behave Differently?," Treasury Working Paper Series 03/32, New Zealand Treasury.
    8. Agnese Bicevska & Aleksejs Melihovs & Krista Kalnberzina, 2009. "Savings in Latvia," Discussion Papers 2009/01, Latvijas Banka.
    9. David Aristei & Federico Perali & Luca Pieroni, 2008. "Cohort, age and time effects in alcohol consumption by Italian households: a double-hurdle approach," Empirical Economics, Springer, vol. 35(1), pages 29-61, August.
    10. Talosaga Talosaga & Mark Vink, 2014. "The Effect of Public Pension Eligibility Age on Household Saving: Evidence from a New Zealand Natural Experiment," Treasury Working Paper Series 14/21, New Zealand Treasury.
    11. Iris Claus & Grant Scobie, 2001. "Household Net Wealth: An International Comparison," Treasury Working Paper Series 01/19, New Zealand Treasury.
    12. Grant M. Scobie & Katherine Henderson, 2009. "Saving Rates of New Zealanders: A Net Wealth Approach," Treasury Working Paper Series 09/04, New Zealand Treasury.
    13. Verbina, Inna, 2003. "Inconsistency in Savings Pattern: Is there an Endogeneity Bias?," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    14. Mark Vink, 2014. "Intergenerational Developments in Household Saving Behaviour," Treasury Working Paper Series 14/23, New Zealand Treasury.
    15. Luca Pieroni & David Aristei, 2006. "Regional Differences in Growth Rates: A Microdata Approach," ERSA conference papers ersa06p799, European Regional Science Association.

    More about this item


    Household saving; lifecycle; age; cohorts;

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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