Assistant Professor of Economics Stephen Wu published a paper titled
"Fatalistic Tendencies: An Explanation of Why People Don't Save" in Contributions to Economic Analysis & Policy: Vol. 4: No.
1, Article 11. This paper offers a new explanation contributing to the
low rates of household savings.
Wu found that people who exhibit fatalistic beliefs do not believe that their current actions will affect their future outcomes and thus save less than an optimal amount. He used data from the 2001 Survey of Consumer Finances (SCF) and the 2000 World Values Survey (WVS) to analyze the role of fatalism in determining household savings behavior. SCF respondents who felt that luck has played an important role in their financial affairs were more likely to realize their need to save, but are less likely to actually do so. Cross-country evidence from the WVS showed that those who believe they have little freedom and control over their lives are also less likely to save. The results hold after controlling for a number of demographic and behavioral factors, and are consistent across income and wealth levels.
Wu found that people who exhibit fatalistic beliefs do not believe that their current actions will affect their future outcomes and thus save less than an optimal amount. He used data from the 2001 Survey of Consumer Finances (SCF) and the 2000 World Values Survey (WVS) to analyze the role of fatalism in determining household savings behavior. SCF respondents who felt that luck has played an important role in their financial affairs were more likely to realize their need to save, but are less likely to actually do so. Cross-country evidence from the WVS showed that those who believe they have little freedom and control over their lives are also less likely to save. The results hold after controlling for a number of demographic and behavioral factors, and are consistent across income and wealth levels.
