Individual and Institutional Factors Related to Low-Income Household Saving Behavior

7 Pages Posted: 6 Apr 2015 Last revised: 1 Jul 2017

See all articles by Stuart Heckman

Stuart Heckman

Kansas State University

Sherman D. Hanna

Ohio State University (OSU)

Date Written: April 4, 2015


This research sought to further understanding of factors related to low-income household saving behavior. Saving behavior, defined as whether a household spent less than income, was analyzed by applying institutional theory, which proposes that households’ institutional environment has a substantial effect on financial decisions. Two logistic regression models were used to test the effects of variables on saving behavior; the first logit was based on the life cycle hypothesis and the second added noneconomic individual factors (i.e., social networks, financial literacy, and psychological variables) and institutional factors (i.e., access, incentives, and facilitation). Institutional factors, including the number of institutions used, credit access, and having an employer sponsored retirement plan, had significant effects even after controlling for the effect of variables based on the life cycle model, suggesting that promoting institutional access and facilitation – especially through employer-provided plans – may encourage saving behavior among low-income households.

Keywords: consumer policy, institutions, low-income households, poverty, saving behavior, Survey of Consumer Finances

JEL Classification: D14, D31, D91, G20, G29

Suggested Citation

Heckman, Stuart and Hanna, Sherman D., Individual and Institutional Factors Related to Low-Income Household Saving Behavior (April 4, 2015). Journal of Financial Counseling and Planning, Vol. 26, No. 2, 2015, Available at SSRN:

Stuart Heckman (Contact Author)

Kansas State University ( email )

319 Justin Hall
Manhattan, KS 66506-4001
United States

Sherman D. Hanna

Ohio State University (OSU) ( email )

1787 Neil Avenue
Campbell 265D
Columbus, OH 43210
United States
614-292-4584 (Phone)

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