Paper
How Can the Poor Save? Theory and Evidence on Saving in Low-Income Households
What propositions should be tested to find out about savings opportunities and contraints?
62 pages
This theoretical paper begins to address issues of savings and asset accumulation through a glimpse at theory and research methods on saving.
Further, the paper:
- Summarises existing theories of saving and asset accumulation;
- Presents a general model of saving which emphasises contextual influences as well as individual characteristics;
- Considers variables affecting ability to save and willingness to save, with an emphasis on poor and near-poor individuals;
- Discusses research and policy implications, including testable propositions.
The remainder of this paper identified additional variables that are likely to predict saving in low-income households:
- Opportunities and constraints (whether real or perceived) shape behaviour at least as much as individual characteristics such as motives and preferences;
- In addition to the constraints associated with very limited incomes, low saving rates may be largely explained by lack of access to institutional mechanisms that facilitate and reward saving.
A subsequent version of this paper has been published as:
Beverly, S. G., & Sherraden, M. (1999). Institutional determinants of saving: Implications for low-income households and public policy. Journal of Socio-Economics, 28(4), 457-473.
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