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

See all articles by Patti Fisher

Patti Fisher

Virginia Polytechnic Institute & State University - Consumer Studies

Catherine Phillips Montalto

Ohio State University (OSU) - Department of Human Sciences

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

Suggested Citation

Fisher, Patti and Phillips Montalto, Catherine, Loss Aversion and Saving Behavior: Evidence from the 2007 U.S. Survey of Consumer Finances (March 2011). Journal of Family and Economic Issues, Issue 1, pp 4–14 (2011), Available at SSRN: https://ssrn.com/abstract=2878779

Patti Fisher (Contact Author)

Virginia Polytechnic Institute & State University - Consumer Studies ( email )

240 Wallace Hall
Blacksburg, VA 24061
United States

HOME PAGE: http://sites.google.com/a/vt.edu/pattifisher/

Catherine Phillips Montalto

Ohio State University (OSU) - Department of Human Sciences ( email )

United States
614-292-4571 (Phone)
614-292-7536 (Fax)

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