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Are we living beyond our means? A comparison of France, Italy, Spain and the United Kingdom

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  • Dr Martin Weale

Abstract

This paper explores the savings needs of France, Italy, Spain and the United Kingdom on the assumption that each cohort is self-sufficient. Cross section profiles for labour income and consumption (taking public and private consumption together) are used. They are adjusted for trend growth with the consumption profile being scaled so that the life time budget constraint for the youngest cohort is met. Rent from land is found to be important to the calculations. The income and consumption profiles are used to calculate the required wealth holding of each older cohort. Savings and wealth holding figures are calculated by age and population data are used to aggregate them for the whole population. Savings rates are found to be lower than those required and holdings of produced wealth are inadequate to pay for current consumption patterns by the current adult population in all four countries. The United Kingdom faces particularly acute problems. The impact of rising survival rates and of longer working life is also explored.

Suggested Citation

  • Dr Martin Weale, 2008. "Are we living beyond our means? A comparison of France, Italy, Spain and the United Kingdom," National Institute of Economic and Social Research (NIESR) Discussion Papers 311, National Institute of Economic and Social Research.
    • Handle: RePEc:nsr:niesrd:311
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    Cited by:

    1. Van de Ven, Justin, 2011. "Do Defined Contribution Pensions Correct for Short-Sighted Savings Decisions? Evidence from the UK," Papers WP399, Economic and Social Research Institute (ESRI).
    2. Dr Justin van de Ven & Dr Martin Weale, 2010. "An Empirical Investigation of Quasi-hyperbolic Discounting," National Institute of Economic and Social Research (NIESR) Discussion Papers 355, National Institute of Economic and Social Research.
    3. Dr Justin van de Ven, 2010. "The Effects of Myopia on Pension Decisions," National Institute of Economic and Social Research (NIESR) Discussion Papers 356, National Institute of Economic and Social Research.
    4. Jacinta C. Nwachukwu, 2017. "Tenure and Spending Within UK Households at the End of the Recent Recession," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(3), pages 1075-1104, September.
    5. Ray Barrell & Martin Weale, 2010. "Fiscal policy, fairness between generations, and national saving," Oxford Review of Economic Policy, Oxford University Press, vol. 26(1), pages 87-116, Spring.
    6. Gál, Róbert Iván & Törzsök, Árpád, 2020. "The savings gap in Hungary," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).

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