Dissaving
Encyclopedia
Dissaving is negative saving. If spending is greater than income, dissaving is taking place. This spending is financed by already accumulated savings, such as money in a savings account, or it can be borrowed.
Dissaving was reported as a typical response to deficits, for households with normal income and expenditure patterns during the depression of the 1930’s.
The life cycle hypothesis of saving
, of Ando and Modigliani proposes that people work and save when they are young and retire and dissave when they become elderly.
Hayashi, Ando and Ferris investigated whether the elderly save or dissave and found that for the United States that families after retirement dissave on average about a third of their peak wealth by the time of death, leaving the rest (mostly their homes) as bequests. In contrast they found that for Japan the elderly forming independent households and those living with children continue to save, for all but the most elderly. From age 80 or more and, also the single elderly of all ages, the dissaving patterns were evident.
Later evidence presented by Horioka reinforces the life cycle hypothesis in Japan.
Dissaving was reported as a typical response to deficits, for households with normal income and expenditure patterns during the depression of the 1930’s.
The life cycle hypothesis of saving
Intertemporal consumption
Economic theories of intertemporal consumption seek to explain people's preferences in relation to consumption and saving over the course of their life...
, of Ando and Modigliani proposes that people work and save when they are young and retire and dissave when they become elderly.
Hayashi, Ando and Ferris investigated whether the elderly save or dissave and found that for the United States that families after retirement dissave on average about a third of their peak wealth by the time of death, leaving the rest (mostly their homes) as bequests. In contrast they found that for Japan the elderly forming independent households and those living with children continue to save, for all but the most elderly. From age 80 or more and, also the single elderly of all ages, the dissaving patterns were evident.
Later evidence presented by Horioka reinforces the life cycle hypothesis in Japan.