Average Propensity to Save
Encyclopedia
The average propensity to save (APS), also known as the savings ratio, is an economics
term that refers to the proportion of income
which is saved, usually expressed for household savings as a percentage of total household disposable income
. The ratio differs considerably over time and between countries. The savings ratio can be affected by (for example): the proportion of older people, as they have less motivation and capability to save; the rate of inflation
, as expectations of rising prices can encourage people to spend now rather than later (monetary base/mass depreciation).
The inverse is the average propensity to consume (APC).
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
term that refers to the proportion of income
Income
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
which is saved, usually expressed for household savings as a percentage of total household disposable income
Disposable income
Disposable income is total personal income minus personal current taxes. In national accounts definitions, personal income, minus personal current taxes equals disposable personal income...
. The ratio differs considerably over time and between countries. The savings ratio can be affected by (for example): the proportion of older people, as they have less motivation and capability to save; the rate of inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
, as expectations of rising prices can encourage people to spend now rather than later (monetary base/mass depreciation).
The inverse is the average propensity to consume (APC).
See also
- Marginal propensity to saveMarginal propensity to saveThe marginal propensity to save refers to the increase in saving that results from an increase in income i.e. The marginal propensity to save might be defined as the proportion of each additional dollar of household income that is used for saving. It is also used as an alternative term for the...
- Marginal propensity to consumeMarginal propensity to consumeIn economics, the marginal propensity to consume is an empirical metric that quantifies induced consumption, the concept that the increase in personal consumer spending occurs with an increase in disposable income...
- Golden Rule savings rateGolden Rule savings rateIn economics, the Golden Rule savings rate is the rate of savings which maximizes steady state level or growth of consumption , as for example in the Solow growth model...
- Kinetic exchange models of marketsKinetic exchange models of marketsKinetic exchange models are multi-agent dynamic models inspired by the statistical physics of energy distribution, which try to explain the robust and universal features of income/wealth distributions....