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The Origins of Savings Behavior

Henrik Cronqvist

University of Miami - Department of Finance

Stephan Siegel

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

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Date posted: July 28, 2010 ; Last revised: November 16, 2013

Suggested Citation

Cronqvist, Henrik and Siegel, Stephan, The Origins of Savings Behavior (November 7, 2013). AFA 2011 Denver Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1649790 or http://dx.doi.org/10.2139/ssrn.1649790

Contact Information

Henrik Cronqvist (Contact Author)
University of Miami - Department of Finance ( email )
P.O. Box 248094
Coral Gables, FL 33124-6552
United States
(305) 515-5898 (Phone)
HOME PAGE: http://sites.google.com/site/henrikcronqvist/
Stephan Siegel
University of Washington - Michael G. Foster School of Business ( email )
Box 353200
Seattle, WA 98195-3200
United States
HOME PAGE: http://faculty.washington.edu/ss1110/
Feedback to SSRN

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