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The impact of collectivism on savings behavior: a case study of Mexican-Americans and non-Mexican Latinos

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  • Joelle Saad-Lessler
  • Karen Richman

Abstract

This interdisciplinary study combines anthropological and economic theories and methods to understand how Mexican-Americans’ collectivist cultural values affect their savings behavior and their preparation for retirement. Mexican-Americans are the fastest growing immigrant group in the United States and they are both younger and expected to live longer than other groups. Yet they are the most insecure in relation to funding retirement. Even when Mexican-American workers are eligible to participate in retirement savings plans at work, they have low participation rates. We analyze data from a Chicago area survey in light of broader anthropological and economic scholarship to argue that Mexican-Americans’ collectivist values influence the choices they make about how to build assets and resources differently from other Latino groups. Latinos are a diverse group by national origin, citizenship and immigration status, characteristics that strongly influence their employment prospects, asset building and retirement savings and security. Financial policy makers need to understand the heterogeneity of financial behavior within the Hispanic community. The collectivist informal economy of Mexican immigrants and their children is at odds with the formal defined contribution retirement savings system, which is geared toward both autonomous individuals and higher-income workers who benefit from the program’s tax deductions. Since these plans penalize participants who withdraw funds before retirement age, they can be deleterious to those who expect both to loan funds to and to borrow money from members of their collectivist social networks. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Joelle Saad-Lessler & Karen Richman, 2014. "The impact of collectivism on savings behavior: a case study of Mexican-Americans and non-Mexican Latinos," Review of Economics of the Household, Springer, vol. 12(3), pages 493-515, September.
    • Handle: RePEc:kap:reveho:v:12:y:2014:i:3:p:493-515
    DOI: 10.1007/s11150-014-9243-z
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    References listed on IDEAS

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    1. Grossbard,Shoshana A. (ed.), 2003. "Marriage and the Economy," Cambridge Books, Cambridge University Press, number 9780521814546, October.
    2. James P. Smith, 1995. "Racial and Ethnic Differences in Wealth in the Health and Retirement Study," Journal of Human Resources, University of Wisconsin Press, vol. 30, pages 158-183.
    3. Grossbard,Shoshana A. (ed.), 2003. "Marriage and the Economy," Cambridge Books, Cambridge University Press, number 9780521891431, October.
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    Cited by:

    1. Miguel Quiñones & Tabitha Grier-Reed, 2024. "The Tanda: An Informal Financial Practice at the Intersection of Culture and Financial Management for Mexican American Families," Journal of Family and Economic Issues, Springer, vol. 45(2), pages 343-353, June.

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    More about this item

    Keywords

    Mexicans; Immigration; Retirement; Collectivism; Assets; Culture; Rituals; J14; J32; Z13;
    All these keywords.

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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