The Effect of Housing on Savings

Abstract

The consensus has been that the savings rate in Japan is considerably higher than in other industrialized countries. Japanese and non-Japanese economists have investigated the reasons why the savings rate is so high. Some doubts were cast on this consensus occasionally, however, proposing that the Japanese savings rate would not be markedly higher than that in other countries, if the measurement of savings were made properly. Another widely held belief was that savings related to potential housing purchase were very important. Some say that this is no longer true. The purpose of this chapter is to examine these subjects, namely the proper measurement of savings, and housing-related savings. Since a housing purchase normally implies a housing loan, special attention is paid to the contribution of repayment to debt. Chapter 5 of this book examined the issue of contract-compulsory savings related to repayment to debt. The influence of gifts and inheritances on the savings rate is also investigated, because a house and land are the typical goods of intergenerational transfers. Finally, wealth distribution is briefly analysed.