Drivers of Long-Term Savings from a Consumers’ Behavioral Perspective: A Large-Scale Empirical Investigation

Abstract

Putting money aside for future needs and expenses as opposed to immediate consumption poses a very important trade-off for nearly every individual. Adequate savings ensure smooth consumption in the course of time and buffer sudden income shocks (Modigliani 1986; Ülkümen and Cheema 2011). Especially in times of financial turmoil the decision to save, notably for the long term, gains relevance for most households and directly affects their present as well as their future asset allocation. Regarding the crucial impact of savings on an individual’s life, we investigate the long-term savings behavior in an empirical study. Via a self-administered online survey we have collected the data necessary for our analysis. 1281 completed questionnaires from European savers were used in our study.

By drawing on Giddens’ (1984) structuration theory, Fishbein and Ajzen’s (1975) theory of reasoned action as well as Bentler and Speckart’s (1979) generalization of Fishbein and Ajzen’s theoretical approach, we directly relate the social context to the savings attitudes and the savings attitudes to long-term savings behavior. Therefore, the two savings attitudes—perceived anxiety and perceived importance—directly affect long-term savings in our research model, whereas the two social context variables—social influence and relationship quality to the savings institution—represent antecedents of the savings attitudes. Thus, we do not expect a direct influence of the social context on the decision to save for the long term, which could have been confirmed by mediation analysis. Further, we have operationalized our research model by applying structural equation modeling. Global fit measures indicate a reasonably good model fit (TLI = 0.931, CFI = 0.942, RMSEA = 0.062, SRMR = 0.082; χ² (143) = 697.414). The resulting path coefficients show that social influence exhibits a significant positive influence on both savings attitudes (0.103** on perceived anxiety and 0.298*** on perceived importance), while relationship quality is positively related to perceived importance (0.378***) but negatively influences perceived anxiety (−0.286***). In addition perceived anxiety negatively affects long-term savings (−0.161***) whereas perceived importance exhibits a positive influence (0.182***).

In conclusion, our proposed framework delineates the crucial drivers of long-term savings. Our results reveal that a well-established relationship with a financial intermediary (a) reduces perceived anxiety towards long-term savings and (b) enhances perceived importance. Both of these aspects in turn positively influence long-term savings in a direct manner. Thus, a sustainable partnership between the consumer and the savings institution, which is based on satisfaction, retention and trust, can affect the attitudes towards long-term savings and ultimately increase the savings rate. Hence, by being a trustworthy and reliable partner and satisfying customers’ needs financial institutions can clearly influence an individual’s savings behavior. In addition, we delineate the attenuating effect of social influence on long-term savings by finding a net negative indirect effect on long-term savings. Thus, family members and friends have a strong impact on the formation of savings attitudes, which can lead to decreasing savings rates.