Why Do Americans Save So Little and Does It Matter?

Robert H. Frank

in Thrift and Thriving in America

Published in print July 2011 | ISBN: 9780199769063
Published online May 2012 | e-ISBN: 9780199896851 | DOI:
Why Do Americans Save So Little and Does It Matter?

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This chapter shows that the aggregate personal savings rate is for the first time since the Great Depression below zero and that the average American family currently carries almost $9,000 in unpaid credit card balances. Although it is difficult to second-guess the claim that Americans save too little, the problem is only partially one of individual self-control. The more difficult issue comes as a collective action problem. It is argued that for many middle-class Americans, saving and spending decisions are greatly influenced by a larger social context where competing moral goods clash. Should a middle-income family, for example, move to a neighborhood that is in a good school district but that costs more than they can responsibly afford, or should they stay in a neighborhood that they can afford, but with much poorer schools? The choice between financial responsibility and security, on the one hand, and the well-being of one's children, on the other, represents a genuine dilemma for many Americans, a dilemma that can only be resolved collectively.

Keywords: personal savings; collective action; middle class Americans; spending; moral goods

Chapter.  7734 words.  Illustrated.

Subjects: Economic Sociology

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