Économie et Statistique n° 472-473Wealth and savings behaviour - The input of the 2010 Wealth survey: savings behaviour, inequalities, retirement and lifecycle, behaviour when faced with risk

Economie et Statistique
Paru le : 18/12/2014
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Household consumption and wealth: going beyond the macroeconomic debate…

Luc Arrondel, Pierre Lamarche et Frédérique Savignac

Generally speaking, the impact of the value of the wealth of households on their consumption is studied at the macroeconomic level. Analysis of this wealth effect is particularly important for economic policy in the recent context of a substantial appreciation of assets. On the basis of aggregate data, estimates for France show that one extra Euro of wealth would lead to an increase in consumption of 0.8 cents to 1 cent, the effect being greater for financial assets than for real estate assets. Our study uses the data of the 2010 Wealth survey to assess that link from individual data. It is based on the differences in composition and in level of assets to identify heterogeneities in consumption behaviour. The results confirm that overall the marginal propensity to consume wealth is small, at 0.5 cents for 1 Euro of additional wealth. However, it depends on the nature of the assets and presents distinct nonlinearities along the wealth scale. The marginal propensity to consume financial assets is over 11 cents per Euro of additional wealth in households where the net wealth is below the median, whereas it is nil for those households of the richest decile. This wealth effect is much less marked for the main residence: 1.1 cents for net wealth below the median and 0.7 cents for the wealthiest decile. Given the concentration of assets, the mean wealth effect mainly reflects the behaviour of the richest households. Nevertheless, the more marked effect observed for less affluent households is a result to be taken into account in monetary and fiscal policies which will not have the same impact on demand and growth according to the categories of assets and the categories of households that they affect most.

Economie et Statistique
No 472-473
Paru le : 18/12/2014