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The Saving Glut of the Rich and the Rise in Household Debt

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  • Atif Mian
  • Ludwig Straub
  • Amir Sufi

Abstract

Rising income inequality since the 1980s in the United States has generated a substantial increase in saving by the top of the income distribution, which we call the saving glut of the rich. The saving glut of the rich has been as large as the global saving glut, and it has not been associated with an increase in investment. Instead, the saving glut of the rich has been linked to the substantial dissaving and large accumulation of debt by the non-rich. Analysis using variation across states shows that the rise in top income shares can explain almost all of the accumulation of household debt held as a financial asset by the household sector. Since the Great Recession, the saving glut of the rich has been financing government deficits to a greater degree.

Suggested Citation

  • Atif Mian & Ludwig Straub & Amir Sufi, 2020. "The Saving Glut of the Rich and the Rise in Household Debt," CESifo Working Paper Series 8201, CESifo.
    • Handle: RePEc:ces:ceswps:_8201
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    More about this item

    Keywords

    inequality; saving glut; household debt; unveiling;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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