Population aging and the probability of saving: a life cycle analysis of the Brazilian case

Abstract

This study analyzes the life cycle of private individuals' savings in Brazil, reflecting on how the proportion of savers changes as the population ages. To this end, we employ a multinomial logit model to compare the probability of savings and dissavings for individuals, according to their ages, based on data from the Household Budget Surveys (HBS) of 2002-2003 and 2008-2009. The results confirm a greater incidence of savers among middle-aged adults and a greater percentage of dissavers among the elderly. However, given the age structure of the Brazilian population, demographic change is still expected to result in an increase in the number of net savers in the coming years.

Who is saving and how much? New evidence from Brazil

“…Other impressive results may be observed in the relationship between gender and individual savings. Our results show that men tend to save more than women and it is consistent with similar studies to Brazil (Zuanazzi and Fochezatto, 2020;Iregui-Boh orquez et al, 2018;Silveira and Moreira, 2015), although gender does not seem to be a crucial factor in the savings behaviour in other countries (Hua and Erreygers, 2019;Metzger, 2017).…”

“…Therefore, it is evident that the importance of individual savings is particularly important in the present context. Although individual savings is an essential resource for individual financial stability, which provides security during uncertainty times (Iregui-Boh orquez et al, 2018), our results show that the majority of Brazilian does not save, and it is consistent with the current literature (Silveira and Moreira, 2015;Moreira and Silveira, 2019;Menezes Filho and Komatsu, 2018;Zuanazzi and Fochezatto, 2020). From a social perspective, this is worrying because, with no savings, Brazilian people tend to depend on bank loans during difficult times.…”

“…Rodrigues et al (2018) found, using HBS of 1995-1996, 2002-2003and 2008-2009, that savings was extremely concentrated in the highest tenths of the income distribution. Finally, using HBS of 2002-2003and 2008-2009and Zuanazzi and Fochezatto (2020 analysed how the proportion of savers would change as the population ages. They found that, in Brazil case, there was a higher incidence of middle-aged adults' savers when compared to the elderly.…”

“…In that case, it is expected that middle-aged individuals have a higher probability of saving compared to younger and older individuals (Modigliani and Brumberg, 1954). A non-linear relationship may be expected (Zuanazzi and Fochezatto, 2020; Iregui-Bohórquez et al , 2018; Bebczuk et al , 2015).…”

“…It is important to note that we evaluate the possibility of adding some interact variables to further explore our data set. However, to the best of our knowledge, there is no empirical literature to support this strategy (Zuanazzi and Fochezatto, 2020; Iregui-Bohórquez et al , 2018; Hua and Erreygers, 2019; Moreira and da Silveira, 2019; Gandelman, 2016).…”