Culture and Household Saving
62 Pages Posted: 5 Dec 2015 Last revised: 2 Nov 2016
Date Written: October 31, 2016
This paper examines the role of culture in households' saving decisions. Exploiting the historical language borders within Switzerland, I isolate the effect of households' exposure to certain language groups from economic, institutional, demographic and geographic factors for a homogeneous and representative sample of households. The analysis uses the Swiss Household Panel which I complement with geographic and socio-economic data. I show that low- and middle-income households located in the German-speaking part are more than 11 percentage points more likely to save than similar households in the French-speaking part. In line with the existing literature, I show that these differences across language regions are consistent with different distributions of time preferences. By contrast, I do not find clear evidence for risk sharing during times of financial distress.
Keywords: Household Finance, Saving, Culture, Household Economics, Language, Peer Effects
JEL Classification: Z1, D12, E21, D91
Suggested Citation: Suggested Citation