Loss Aversion and Saving Behavior: Evidence from the 2007 U.S. Survey of Consumer Finances
Journal of Family and Economic Issues, Issue 1, pp 4–14 (2011)
28 Pages Posted: 4 Dec 2016
Date Written: March 2011
Abstract
This study uses data from the 2007 Survey of Consumer Finances to examine household saving behavior based on the two-period model of consumption/saving presented by Bowman et al. (1999). The main focus of the model is the existence of an asymmetry in saving behavior in response to positive and negative adjustments in income. The results of the logistic regression analysis support the existence of loss aversion at the household level, where having income below the household’s reference level significantly decreases the likelihood of saving, but having income above the household’s reference level does not have a significant effect on the likelihood of saving.
Keywords: Household economics, loss aversion, saving
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