Gisle Natvik, Norwegian Business School

Saving Behavior across the Wealth Distribution


Do wealthier households save a larger share of their incomes than poorer ones? We use Norwegian administrative panel data on income and wealth to examine how saving rates vary across the wealth distribution. We compare our findings to the prediction of workhorse macro models that saving rates are either independent of or decreasing with wealth. We find that the relation between saving rates and wealth depends on whether saving includes capital gains. Saving rates net of capital gains (“net saving rates") are approximately constant across the wealth distribution, seemingly consistent with workhorse models. However, saving rates including capital gains (“gross saving rates") increase markedly with wealth. Since the predictions of economic theories are about gross saving, our findings challenge workhorse models with approximately constant saving rates. In contrast, our empirical findings are consistent with a theory featuring multiple assets and portfolio adjustment frictions.

Gisle J. Natvik is a professor of economics. His main research interests are within macro economics, monetary economics and political economy.Natvik's work has been published in European Economic Review, International Economic Review, Journal of Money, Credit and Banking, Journal of Public Economics, Scandinavian Journal of Economics, and other journals.