2. Research Projects

Research Projects

Nov 1, 2019 - Mar 31, 2021

Understanding Saving Motives


Retirement savings is an important resource for an elderly to avoid living in poverty. Several studies found that a large fraction of people close to retirement do not have enough savings and likely outlive their retirement pots. To understand why people choose to have a certain amount of savings, we will examine underlying saving motives of individuals and quantify their relative contributions toward the retirement savings. Literature emphasizes that individuals’ saving is driven by three motives, namely life-cycle, precautionary, and bequest motives. It is well known that it is difficult to separately identify and measure the contribution of each motive since one dollar saved for one cause can be also well used for another. To overcome the identification problem we propose a novel strategy by exploiting the fact that individuals save for a different reason in each stage of life. Our findings will have an implication on an effective design of programs to increase individuals’ retirement savings and reduce a poverty among the elderly.