Skip to main content
SpringerLink
Log in

Is There Evidence of Loss Aversion in Saving Behaviors in Spain?

  • Original Paper
  • Published:
Journal of Family and Economic Issues Aims and scope Submit manuscript

Abstract

This study uses data from the 2005 Survey of Household Finances to investigate the existence of loss aversion in household saving behavior in Spain. Loss aversion refers to an asymmetry in saving behavior in response to increases and decreases in income, where income decreases have a greater effect than increases. Evidence of loss aversion in household saving behaviors in the U.S. has been presented in previous research, and evidence of loss aversion in saving has been found using aggregate data from Europe, but to date there are no household level studies on loss aversion and saving behaviors in Europe. The present results do not support the existence of loss aversion at the household level in Spain. The results indicate symmetry in the responses to positive and negative income changes, failing to provide support for loss aversion in household saving behaviors.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Abdellaoui, M., Bleichrodt, H., & Paraschiv, C. (2005). Loss aversion under prospect theory: A parameter-free measurement. Management Science, 53, 1659–1674.

    Article  Google Scholar 

  • Aghevli, B., Boughton, J., Montiel, P., Villanueva, D., & Woglom, G. (1990). The role of national saving in the world economy: Recent trends and prospects. (International Monetary Fund Occasional Paper No. 67).

  • Allison, P. D. (1999). Logistic regression using the SAS System: Theory and application. Cary, NC: SAS Institute Inc.

    Google Scholar 

  • Ando, A., & Modigliani, F. (1963). The “life cycle” hypothesis of saving: Aggregate implications and tests. American Economic Review, 53, 55–84.

    Google Scholar 

  • Attanasio, O., & Banks, J. (2001). The assessment: Household saving–issues in theory and policy. Oxford Review of Economic Policy, 17, 1–19.

    Article  Google Scholar 

  • Avery, R., & Kennickell, A. B. (1991). Household saving in the U.S. Review of Income and Wealth, 37, 409–432.

    Article  Google Scholar 

  • Azpitarte, F. (2008). The vulnerability of households to poverty: The role of household wealth in Spain and in the United Kingdom. Paper presented at the 30th General Conference of the International Association for Research in Income and Wealth. Retrieved on March 25, 2010, from http://www.iariw.org/papers/2008/azpitarte.pdf.

  • Bank of Spain. (2008, January). EFF2005: methods, results and changes between 2002 and 2005. Economic Bulletin.

  • Banks, J., Blundell, R., Disney, R., & Emmerson, C. (2002). Retirement, pensions, and the adequacy of saving, Briefing Note No. 29. London: Institute for Fiscal Studies.

    Google Scholar 

  • Banks, J., Blundell, R., & Tanner, S. (1998). Is there a retirement-savings puzzle? American Economic Review, 88, 769–788.

    Google Scholar 

  • Bernheim, B. D., Skinner, J., & Weinberg, S. (2001). What accounts for the variation in retirement wealth among U.S. households? American Economic Review, 91, 832–857.

    Article  Google Scholar 

  • Beverly, S. G., McBride, A. M., & Schreiner, M. (2003). A framework of asset-accumulation stages and strategies. Journal of Family and Economic Issues, 24, 143–156.

    Article  Google Scholar 

  • Board of Governors of the Federal Reserve System. (2009). Codebook for 2007 Survey of Consumer Finances. Retrieved May 19, 2009 from Federal Reserve Board website, http://www.federalreserve.gov/pubs/OSS/oss2/2007/codebk2007.txt.

  • Booij, A. S., & van de Kuilen, G. (2009). A parameter-free analysis of the utility of money for the general population under prospect theory. Journal of Economic Psychology, 30, 651–666.

    Article  Google Scholar 

  • Bosworth, B. P., Burtless, G., & Sabelhaus, J. (1991). The decline in saving: Evidence from household surveys. Brookings Papers on Economic Activity, 1, 183–256.

    Article  Google Scholar 

  • Bover, O. (2004). The Spanish Survey of Household Finances (EFF): Description and methods of the 2002 wave. Occasional Paper Series, 0409, 1–30.

    Google Scholar 

  • Bover, O. (2008a). The Spanish Survey of Household Finances (EFF): Description and methods of the 2005 wave. Occasional Paper Series, 0803, 1–30.

    Google Scholar 

  • Bover, O. (2008b). Wealth inequality and household structure: U.S. vs Spain. Working Paper Series, 0804, 1–42.

    Google Scholar 

  • Bowman, D., Minehart, D., & Rabin, M. (1999). Loss aversion in a consumption-savings model. Journal of Economic Behavior and Organization, 38, 155–178.

    Article  Google Scholar 

  • Browning, M., & Lusardi, A. (1996). Household saving: Micro theories and micro facts. Journal of Economic Literature, 34, 1797–1855.

    Google Scholar 

  • Campbell, J. Y., & Mankiw, J. G. (1990). Permanent income, current income, and consumption. Journal of Business and Economic Statistics, 8, 365–379.

    Google Scholar 

  • Canova, L., Rattazzi, A. M., & Webley, P. (2005). The hierarchical structure of saving motives. Journal of Economic Psychology, 26, 21–34.

    Article  Google Scholar 

  • Carroll, C. D. (1994). How does future income affect current consumption? The Quarterly Journal of Economics, 109, 111–148.

    Article  Google Scholar 

  • Carroll, C. D., Rhee, B.-K., & Rhee, C. (1994). Are there cultural effects on saving? Some cross-sectional evidence. The Quarterly Journal of Economics, 109, 685–699.

    Article  Google Scholar 

  • Chaulk, B., Johnson, P. J., & Bulcroft, R. (2003). Effects of marriage and children on financial risk tolerance: A synthesis of family development and prospect theory. Journal of Family and Economic Issues, 24, 257–279.

    Article  Google Scholar 

  • Christensen, A.-K., Dupont, J., & Schreyer, P. (2005). International comparability of the Consumer Price Index: Owner-occupied housing. Paper presented at the OECD Seminar, inflation measures: too high–too low–internationally comparable? Paris, France. Retrieved March 25, 2010 from http://www.oecd.org/dataoecd/14/18/34987270.pdf.

  • Davies, J. (1981). Uncertain lifetime, consumption, and dissaving in retirement. Journal of Political Economy, 89, 561–578.

    Article  Google Scholar 

  • Davis, E. P., & Schumm, W. R. (1987). Savings behavior and satisfaction with savings: A comparison of low- and high-income groups. Home Economics Research Journal, 15, 247–256.

    Article  Google Scholar 

  • Deaton, A. (1991). Saving and liquidity constraints. Econometrica, 59, 1221–1248.

    Article  Google Scholar 

  • Del Rio, C., & Ruiz-Castillo, J. (2002). Demographic trends and living standards during the 1980s. Review of Economic Applications, 30(10), 5–24.

    Google Scholar 

  • DeVaney, S. A., Anong, S., & Whirl, S. E. (2007). Household savings motives. The Journal of Consumer Affairs, 41, 174–186.

    Article  Google Scholar 

  • Dynan, K., Skinner, J., & Zeldes, S. (2004). Do the rich save more? Journal of Political Economy, 112, 397–444.

    Article  Google Scholar 

  • European Central Bank. (2009). Survey data on household finance and consumption: Research summary and policy use (Occasional Paper Series No. 100). Retrieved January 17, 2011 from the European Central Bank website, http://www.ecb.int/pub/pdf/scpops/ecbocp100.pdf.

  • Fan, J. X., & Abdel-Ghany, M. (2004). Patterns of spending behavior and the relative position in the income distribution: Some empirical evidence. Journal of Family and Economics, 25, 163–178.

    Article  Google Scholar 

  • Fernandez-Cordon, J. A. (1997). Youth residential independence and autonomy: A comparative study. Journal of Family Issues, 18(6), 576–607.

    Article  Google Scholar 

  • Fershtman, C. (1996). On the value of incumbency—Managerial reference points and loss aversion. Journal of Economic Psychology, 17, 245–257.

    Article  Google Scholar 

  • Finke, M. S., & Huston, S. J. (2003). The brighter side of financial risk: Financial risk tolerance and wealth. Journal of Family and Economics, 24, 233–256.

    Article  Google Scholar 

  • Fisher, P. J. (2010). Gender differences in personals saving behaviors. Journal of Financial Counseling and Planning, 21, 14–24.

    Google Scholar 

  • Fisher, P. J., & Montalto, C. P. (2010). Effect of saving motives and horizon on saving behaviors. Journal of Economic Psychology, 31, 92–105.

    Article  Google Scholar 

  • Fisher, P. J., & Montalto, C. P. (2011). Loss aversion and saving behavior: Evidence from the 2007 U.S. Survey of Consumer Finances. Journal of Family and Economic Issues, 32(1), 4–14. doi:10.1007/s10834-010-9196-1.

    Article  Google Scholar 

  • Fontes, A. (2011). Differences in the likelihood of ownership of retirement saving assets by the foreign and native-born. Journal of Family and Economic Issues,. doi:10.1007/s10834-011-9262-3.

    Google Scholar 

  • Friedman, M. (1957). A theory of the consumption function. Princeton: Princeton University Press.

    Google Scholar 

  • Furnham, A. (1985). Why do people save? Attitudes to, and habits of saving money in Britain. Journal of Applied Social Psychology, 15, 354–373.

    Article  Google Scholar 

  • Furnham, A. (1999). The saving and spending habits of young people. Journal of Economic Psychology, 20, 677–697.

    Article  Google Scholar 

  • Gouskova, E., Chiteji, N., & Stafford, F. (2010). Pension participation: Do parents transmit time preference? Journal of Family and Economic Issues, 31, 138–150.

    Article  Google Scholar 

  • Hamermesh, D. (2007). Replication in economics, Discussion Paper Series, No. 2760. Bonn: Institute for the Study of Labor.

    Google Scholar 

  • Han, C.-K., & Sherraden, M. (2009). Attitudes and saving in individual development accounts: Latent class analysis. Journal of Family and Economic Issues, 30, 226–236.

    Article  Google Scholar 

  • Hefferan, C. (1982). Determinants and patterns of family saving. Home Economics Research Journal, 11, 47–55.

    Article  Google Scholar 

  • Hira, T. K. (1987). Money management practices influencing household asset ownership. Journal of Consumer Studies and Home Economics, 11, 183–194.

    Article  Google Scholar 

  • Hondroyiannis, G. (2010). Fertility determinants and economic uncertainty: An assessment using European panel data. Journal of Family and Economic Issues, 31, 33–50.

    Article  Google Scholar 

  • Hong, G.-S., Sung, J., & Kim, S.-M. (2002). Saving behavior among Korean households. Family and Consumer Sciences Research Journal, 30, 437–462.

    Article  Google Scholar 

  • Huang, J. (2003). Unemployment and family behavior in Taiwan. Journal of Family and Economic Issues, 24, 27–48.

    Article  Google Scholar 

  • Japelli, T. (1990). Who is credit constrained in the U.S. economy? Quarterly Journal of Economics, 105, 219–234.

    Article  Google Scholar 

  • Kahneman, D., & Tversky, A. (1979). Prospect theory. Econometrica, 47, 263–292.

    Article  Google Scholar 

  • Kennickell, A. (1997). Multiple imputation and disclosure protection: The case of the 1995 Survey of Consumer Finances. Retrieved October 9, 2009 from the Federal Reserve Board website, http://www.federalreserve.gov/PUBS/oss/oss2/papers/impute98.pdf.

  • Kim, J., LaTaillade, J., & Kim, H. (2011). Family processes and adolescents’ financial behaviors. Journal of Family and Economic Issues,. doi:10.1007/s10834-011-9270-3.

    Google Scholar 

  • L’Haridon, O. (2009). Behavior in the loss domain: An experiment using the probability trade-off consistency condition. Journal of Economic Psychology, 30, 540–551.

    Article  Google Scholar 

  • Lea, S. E. G., Webley, P., & Walker, C. M. (1995). Psychological factors in consumer debt: Money management, economic socialization, and credit use. Journal of Economic Psychology, 16, 681–701.

    Article  Google Scholar 

  • Lee, S., Park, M., & Montalto, C. P. (2000). The effect of family life cycle and financial management practices on household saving patterns. Journal of Korean Home Economics Association English Edition, 1, 79–92.

    Google Scholar 

  • Lewis, A., Webley, P., & Furnham, A. (1995). The new economic mind. The social psychology of economic behaviour. Hemel Hempstead: Harvester Wheatsheaf.

    Google Scholar 

  • Lusardi, A. (1998). On the importance of the precautionary saving motive. American Economic Review Papers and Proceedings, 88, 449–453.

    Google Scholar 

  • Marchante, A. J., Ortega, B., & Trujillo, F. (2001). Regional differences in personal saving rates in Spain. Papers in Regional Science, 80, 465–482.

    Article  Google Scholar 

  • Martinez-Granado, M., & Ruiz-Castillo, J. (2002). The decisions of Spanish youth: A cross-section study. Journal of Population Economics, 15(2), 305–330.

    Article  Google Scholar 

  • Menard, S. (1995). Applied logistic regression analysis. Thousand Oaks: Sage Publications.

    Google Scholar 

  • Minder, R. (2011, January 7). Spain to raise retirement age to 67. The New York Times. Retrieved January 27, 2011 from http://www.nytimes.com/2011/01/28/world/europe/28iht-spain28.html.

  • Mirer, T. W. (1979). The wealth-age relation among the aged. American Economic Review, 69, 435–443.

    Google Scholar 

  • Montalto, C. P., & Sung, J. (1996). Multiple imputation in the 1992 Survey of Consumer Finances. Financial Counseling and Planning, 7, 133–146.

    Google Scholar 

  • Muske, G., & Winter, M. (2001). An in-depth look at family cash-flow management practices. Journal of Family and Economic Issues, 22, 353–372.

    Article  Google Scholar 

  • OECD. (2010). OECD Factbook 2010. Retrieved January 17, 2011 from http://www.oecd-ilibrary.org/sites/factbook-2010-en/02/02/03/index.html?contentType=&itemId=/content/chapter/factbook-2010-14-en&containerItemId=/content/serial/18147364&accessItemIds=&mimeType=text/html.

  • Palumbo, M. G. (1999). Uncertain medical expenses and precautionary saving near the end of the life cycle. The Review of Economic Studies, 66, 395–421.

    Article  Google Scholar 

  • Pence, K. M. (2001). 401(k)s and household saving: New evidence from the Survey of Consumer Finances. Retrieved February 6, 2007 from Federal Reserve Board of Governors website: http://www.federalreserve.gov/Pubs/feds/2002/200206/200206pap.pdf.

  • Rabinovich, A., & Webley, P. (2007). Filling the gap between planning and doing: Psychological factors involved in the successful implementation of saving intention. Journal of Economic Psychology, 28, 444–461.

    Article  Google Scholar 

  • Reher, D. S. (1998). Family ties in Western Europe: Persistent contrasts. Population and Development Review, 24, 203–234.

    Article  Google Scholar 

  • Rubin, D. B. (1987). Multiple imputation for nonresponse in surveys. New York: Wiley.

    Book  Google Scholar 

  • Sanchez Martin, A. R. (2001). Endogenous retirement and public pension system reform in Spain. Working Paper. Retrieved January 17, 2011 from http://e-archivo.uc3m.es/bitstream/10016/249/1/we013503.pdf.

  • Sanders, C. K., & Porterfield, S. L. (2010). The ownership society and women: Exploring female householders’ ability to accumulate assets. Journal of Family and Economic Issues, 31. Retrieved January 19, 2010 from http://www.springerlink.com/content/j257775466502757/.

  • Sandmo, A. (1970). The effect of uncertainty on saving decisions. Review of Economic Studies, 37, 353–360.

    Article  Google Scholar 

  • Schmidt, U., & Traub, S. (2002). An experimental test of loss aversion. Journal of Risk and Uncertainty, 25, 233–249.

    Article  Google Scholar 

  • Shea, J. (1995). Union contracts and the life-cycle/permanent-income hypothesis. The American Economic Review, 85, 186–200.

    Google Scholar 

  • Sibly, H. (2002). Loss averse customers and price inflexibility. Journal of Economic Psychology, 23, 521–538.

    Article  Google Scholar 

  • Sierminska, E., Brandolini, A., & Smeeding, T. (2007). The Luxembourg wealth study: A cross country comparable database for household wealth research. Journal of Economic Inequality, 4, 375–383.

    Article  Google Scholar 

  • Smith, J. P. (1995). Racial and ethnic differences in wealth in the health and retirement study. Journal of Human Resources, 30, S158–S183.

    Article  Google Scholar 

  • Tamborini, C., Iams, H., & Reznik, Gayle. (2011). Women’s earnings before and after marital dissolution: Evidence from longitudinal earnings records matched to survey data. Journal of Family and Economic Issues,. doi:10.1007/s10834-011-9264-1.

    Google Scholar 

  • Thaler, R. H. (1990). Anomalies: Saving, fungibility, and mental accounts. Journal of Economic Perspectives, 4, 193–205.

    Article  Google Scholar 

  • Thaler, R. H., & Benartzi, S. (2001). Save more tomorrow: Using behavioral economics to increase employee savings. Retrieved March 13, 2006 from Research Papers in Economics website, http://www.journals.uchicago.edu/cgi-bin/resolve?JPE112118PDF.

  • Tversky, A., & Kahneman, D. (1986). Rational choice and the framing of decisions. Journal of Business, 69, S251–S278.

    Google Scholar 

  • Ulker, A. (2009). Wealth holdings and portfolio allocation of the elderly: The role of marital history. Journal of Family and Economic Issues, 30, 90–108.

    Article  Google Scholar 

  • Walther, H. (2010). Anomalies in intertemporal choice, time-dependent uncertainty and expected utility—A common approach. Journal of Economic Psychology, 31, 114–130.

    Article  Google Scholar 

  • Wärneryd, K.-E. (1999). The psychology of saving. A study of economic psychology. Cheltenham: Edward Elgar Publishing.

    Google Scholar 

  • Xiao, J. J., & Anderson, J. G. (1997). Hierarchical financial needs reflected by household financial asset shares. Journal of Family and Economic Issues, 18, 333–355.

    Article  Google Scholar 

  • Xiao, J., & Olson, G. I. (1993). Mental accounting and saving behavior. Home Economics Research Journal, 22, 92–109.

    Article  Google Scholar 

  • Yeung, W. J., & Hofferth, S. L. (1998). Family adaptations to income and job loss in the U.S. Journal of Family and Economic Issues, 19, 255–283.

    Article  Google Scholar 

  • Zeldes, S. P. (1989). Consumption and liquidity constraints: An empirical investigation. Journal of Political Economy, 97, 305–346.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Apparel, Housing, and Resource Management, College of Liberal Arts and Human Sciences at Virginia Tech, 209 Wallace Hall, Blacksburg, VA, 24061, USA

    Patti J. Fisher

Authors
  1. Patti J. Fisher
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Patti J. Fisher.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Fisher, P.J. Is There Evidence of Loss Aversion in Saving Behaviors in Spain?. J Fam Econ Iss 34, 41–51 (2013). https://doi.org/10.1007/s10834-012-9290-7

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10834-012-9290-7

Keywords

Search

Navigation