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Loss Aversion and Saving Behavior: Evidence from the 2007 U.S. Survey of Consumer Finances

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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. (Econ Behav Organ 38:155–178, 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.

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Authors and Affiliations

  1. Department of Apparel, Housing, and Resource Management, College of Liberal Arts and Human Sciences, Virginia Tech, 258 Wallace Hall, Blacksburg, VA, 24061, USA

    Patti J. Fisher

  2. Department of Consumer Sciences, The Ohio State University, Campbell Hall 265J, 1787 Neil Ave., Columbus, OH, 43210, USA

    Catherine P. Montalto

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  1. Patti J. Fisher
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  2. Catherine P. Montalto
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Correspondence to Patti J. Fisher.

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Fisher, P.J., Montalto, C.P. Loss Aversion and Saving Behavior: Evidence from the 2007 U.S. Survey of Consumer Finances. J Fam Econ Iss 32, 4–14 (2011). https://doi.org/10.1007/s10834-010-9196-1

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