Paper

How Can the Poor Save? Theory and Evidence on Saving in Low-Income Households

What propositions should be tested to find out about savings opportunities and contraints?

This theoretical paper begins to address issues of savings and asset accumulation through a glimpse at theory and research methods on saving.

Further, the paper:

  • Summarises existing theories of saving and asset accumulation;
  • Presents a general model of saving which emphasises contextual influences as well as individual characteristics;
  • Considers variables affecting ability to save and willingness to save, with an emphasis on poor and near-poor individuals;
  • Discusses research and policy implications, including testable propositions.

The remainder of this paper identified additional variables that are likely to predict saving in low-income households:

  • Opportunities and constraints (whether real or perceived) shape behaviour at least as much as individual characteristics such as motives and preferences;
  • In addition to the constraints associated with very limited incomes, low saving rates may be largely explained by lack of access to institutional mechanisms that facilitate and reward saving.

A subsequent version of this paper has been published as:
Beverly, S. G., & Sherraden, M. (1999). Institutional determinants of saving: Implications for low-income households and public policy. Journal of Socio-Economics, 28(4), 457-473.

About this Publication

By Beverly, S.
Published