SIFR Research Report Series, Institute for Financial Research
The Origins of Savings Behavior
() and Stephan Siegel
Abstract: What are the origins of individual savings behavior? Using
data on identical and fraternal twins matched with data on their savings
behavior, we find that an individual's savings propensity is governed by
both genetic predispositions, social transmission from parents to their
children, and gene-environment interplay where certain environments
moderate genetic influences. Genetic variation explains about 35 percent of
the variation in savings rates across individuals, and this genetic effect
is stronger in less constraining, high socioeconomic status environments.
Parent-child transmission influences savings for young individuals and
those who grew up in a family environment with less competition for
parental resources. Individual-specific life experiences is a very
important explanation for behavior in the savings domain, and strongest in
urban communities. In a world progressing rapidly towards individual
retirement savings autonomy, understanding the origins of individuals'
savings behavior are of key importance to economists as well as policy
Keywords: Savings; Consumption; Behavioral Genetics; (follow links to similar papers)
JEL-Codes: D10; D31; G11; (follow links to similar papers)
48 pages, September 15, 2010
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