The Origins of Savings Behavior
University of Miami - Department of Finance
University of Washington - Michael G. Foster School of Business
November 7, 2013
AFA 2011 Denver Meetings Paper
Analyzing a large sample of identical and fraternal twins matched with data on their savings behavior, we find that genetic differences explains about 33 percent of the variation in savings propensities across individuals. Each individual is born with a genetic predisposition to a specific savings behavior, an effect that is found not to disappear later in life. Parenting contributes to the variation in savings rates among younger individuals in our sample, but its effect has decayed significantly for middle-aged and older individuals. The family environment when growing up (e.g., parents' wealth) and an individual's own current socioeconomic status moderate genetic effects. Finally, we find that savings is genetically correlated with income growth, smoking, and obesity, suggesting that the genetic component of savings behavior reflects genetic differences across individuals with respect to time preferences or self-control. We discuss implications of these findings for public policy.
Number of Pages in PDF File: 54
Keywords: Savings, Consumption, Behavioral Genetics
Date posted: July 28, 2010 ; Last revised: November 16, 2013
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