Is the selfish life-cycle model more applicable in Japan and, if so, why? A literature survey

Abstract

The selfish life-cycle model or hypothesis is, together with the dynasty or altruism model, the most widely used theoretical model of household behavior in economics, but does this model apply in the case of a country like Japan, which is said to have closer family ties than other countries? In this paper, we first provide a brief exposition of the simplest version of the selfish life-cycle model and then survey the literature on household saving and bequest behavior in Japan in order to answer this question. The paper finds that almost all of the available evidence suggests that the selfish life-cycle model applies to at least some extent in all countries but that there is more consistent support for this model in Japan than in the United States and other countries. It then explores possible explanations for why the life-cycle model is more consistently supported in Japan than in other countries, attributing this finding to government policies, institutional factors, economic factors, demographic factors, and cultural factors. Finally, it shows that the findings of the paper have many important implications for economic modeling and for government tax and expenditure policies.

Do the Retired Elderly in Europe Decumulate Their Wealth? The Importance of Bequest Motives, Precautionary Saving, Public Pensions, and Homeownership

“…However, Horioka and Ventura (2022) find that, in Europe, the retirement motive is the most important motive for saving, that saving for bequests and inter vivos transfers ranks second, and that saving for precautionary purposes ranks third, and Horioka and Watanabe (1997) and Horioka et al (2000) find that saving for children's educational and marriage expenses are both important in Japan and that including these in saving for intergenerational transfers narrows (but does not totally close) the gap between the share of saving for precautionary purposes and the share of saving for bequests and other intergenerational transfers. These findings provide further corroboration that both bequest motives and precautionary saving are important as explanations of the Wealth Decumulation (or Retirement Saving) Puzzle but that precautionary saving may be of greater relative importance (see Horioka, 2021, for a more comprehensive survey of the literature on saving motives, and Arrondel and Masson, 2006, Laferrere and Wolff, 2006, Horioka, 2014, 2021 for surveys on the literature on bequest motives).…”

Do the Retired Elderly in Europe Decumulate Their Wealth? The Importance of Bequest Motives, Precautionary Saving, Public Pensions, and Homeownership

“…(2000) find that saving for children's educational and marriage expenses are both important in Japan and that including these in saving for intergenerational transfers narrows (but does not totally close) the gap between the share of saving for precautionary purposes and the share of saving for bequests and other intergenerational transfers. These findings provide further corroboration that both bequest motives and precautionary saving are important as explanations of the Wealth Decumulation (or Retirement Saving) Puzzle but that precautionary saving may be of greater relative importance (see Horioka, 2021, for a more comprehensive survey of the literature on saving motives, and Arrondel and Masson, 2006, Laferrere and Wolff, 2006, Horioka, 2014, 2021, for surveys on the literature on bequest motives).…”

“…First and most obviously, it is related to the many studies have been conducted in the United States and other countries that analyze the wealth accumulation (saving) behavior of the elderly with the intention of shedding light on whether the Wealth Decumulation (or Retirement Saving) Puzzle is observed and, if so, what the possible explanations for this puzzle are. We will not survey this literature in detail because comprehensive surveys can be found in Hurd (1990), Poterba (1994), Horioka (2010), van Ooijen et al (2015, Niimi and Horioka (2019), Suari-Andreu et al (2019), Horioka (2020), andHorioka (2021).…”

“…(2016), Niimi and Horioka (2019), Suari‐Andreu et al . (2019), Ventura and Horioka (2020), and Horioka (2021).…”

Impact of Changing Socioeconomic Conditions on Family Caregiving Norms: Evidence from Japan

“…However, this law was repealed after the Second World War, which had a profound negative impact on the perception of traditional caregiving norms [ 18 ]. Horioka [ 19 , 20 ] discovered that bequests for altruistic reasons are declining in Japan, and they are increasingly used to secure care and living expenses in old age. Other factors, such as the decline in birth rate, changes in family trends, including a greater tendency for people to marry later, and the increase in divorce rates, all have a significant impact on perceptions of family caregiving [ 21 ].…”