men spend more of the income they control for their own consumption than do women. Alcohol, cigarettes, status consumer goods, even "female companionship" are noted in these studies.
Another well known paper found that a UK policy change that transferred resources from fathers to mothers resulted in more spending on women's and children's clothing. If expenditure patterns change when one sex gains more control over household income, it makes sense that savings behaviour would change too.
But who is more likely to save, men or women?
Here is my list of reasons why women would be expected to save more:
- women live longer
- women are more likely to require long term care, because they are more likely to outlive their spouse, and they are more likely to experience a number of age-related problems
- women are more risk averse
Women should save, because they'll need the money down the road. And will save, because they worry.
Here's my list of why men would be expected to save more:
- saving begets wealth, which in turn gets men the one thing they want. For example, Wei and Zhang have recently argued that "Chinese parents with a son raise their savings... in order to improve their son's relative attractiveness for marriage."
- women invest more in their children. This phenomenon is well-documented. As yet, however, no one has really explored the flip side of investing in children: having less to invest in material assets.
- men are expected to be providers, therefore are socially conditioned to save (men worry too)
- even if men and women save at the same rate, because men are less risk averse, they will invest in riskier assets, leading to higher rates of return and thus higher stocks of wealth.
Even if we abstract from the idea of men and women having different preferences over savings, and assume that all decisions are made in total peace and harmony, there are additional reasons to expect saving rates to fall as female labour force participation rates.
Compare, for example, two families.
Old family: husband = earnings of $80,000; wife = household production of $30,000.
New family: husband = earnings of $60,000; wife = earnings of $40,000; household production of $10,000.
If we add together the value of earnings and the value of household production, and ignore taxes etc., the two families have the same total maket+household income of $110,000.
Suppose each saves $10,000. Old family's savings rate is $10,000/$80,000 or 12.5 percent. New family's savings rate is $10,000/($60,000+$40,000) or 10 percent.
The only thing that has changed is that production has moved from the household to the market, but it looks as if savings rates have declined.
Yet there are real reasons why savings rates might fall as more couples move towards being dual earner families. A second earner is insurance - if one person loses his/her job, there's still another income to fall back upon. Hence there is less need to save for a rainy day, or have precautionary savings.
Unfortunately there is little known about the interrelation between gender and savings. I am working on paper on the topic right now, and will summarize the findings here once the report has been released.