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Household saving in Australia

Author

Listed:
  • Finlay Richard

    (Reserve Bank of Australia, 65 Martin Place, NSW 2000, Australia School of Economics, University of New South Wales, NSW 2052, Australia)

  • Price Fiona

    (Reserve Bank of Australia, 65 Martin Place, NSW 2000, Australia)

Abstract

This paper investigates household saving behavior in Australia, as well as the drivers behind the recent rise in the aggregate household saving ratio. Our results explaining differences in saving behavior across households are consistent with theory and previous findings. As might be expected, households’ saving ratios tend to increase with income, but decrease with wealth and gearing. More at-risk households such as single-parent and migrant households tend to save more than other households, all else being equal. While saving differs substantially across age groups we find that, at least in part, this reflects differing circumstances. Our results suggest that the rise in household saving between 2003/2004 and 2009/2010 was driven by changes in behavior rather than changes in population characteristics: in particular, more educated households, as well as households with high debt and/or wealth increased their propensity to save. Our interpretation of these results is that a reduction in future income growth expectations for more highly educated households after the financial crisis, and an associated effort to rebuild wealth and repay debt, drove to the aggregate rise in household saving.

Suggested Citation

  • Finlay Richard & Price Fiona, 2015. "Household saving in Australia," The B.E. Journal of Macroeconomics, De Gruyter, vol. 15(2), pages 677-704, July.
    • Handle: RePEc:bpj:bejmac:v:15:y:2015:i:2:p:677-704:n:7
    DOI: 10.1515/bejm-2014-0077
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    2. Rahmanda Muhammad Thaariq & Arif Anindita & Hafizha Dea Iftina, 2021. "The Internet Miracle: The Impact Of Internet Access On Household Saving In Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 24(2), pages 255-282, June.
    3. Glenn Abela & William Gatt, 2021. "Saving behaviour in Malta: Insights from the Household Budgetary Survey," CBM Working Papers WP/02/2021, Central Bank of Malta.
    4. Adriana Helena Cruz León & José Carlos Trejo García & Humberto Ríos Bolívar, 2019. "Desarrollo de un modelo logit para examinar el comportamiento del ahorro en la región centro de México, de acuerdo al perfil de los hogares," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 14(1), pages 57-77, Enero-Mar.
    5. Wei-Ting Pan, 2016. "The Impact of Mandatory Savings on Life Cycle Consumption and Portfolio Choice," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 32, July-Dece.
    6. Susan Black & Lamorna Rogers & Albina Soultanaeva, 2012. "Households' Appetite for Financial Risk," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 37-42, June.
    7. Kamruzzaman, Md. & Shatu, Farjana & Habib, Khandker Nurul, 2020. "Travel behaviour in Brisbane: Trends, saturation, patterns and changes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 140(C), pages 231-250.
    8. Wei-Ting Pan, 2016. "The Impact of Mandatory Savings on Life Cycle Consumption and Portfolio Choice," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 2-2016, January-A.

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    More about this item

    Keywords

    household saving; micro data;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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