MOTIVES FOR SAVING

Abstract

Various studies and empirical work have been done on the motives for saving. This academic exercise gives you a review of some of the motives for saving. Life cycle / Permanent Income hypothesis is an important motive for saving. However, it has failed as an universal model in its explanation. The model, its failure and some of its improvements are captured in this study. Other motives of saving such as precautionary motive, bequest motive, avarice motive, intertemporal substitution motive, downpayment motive, improvement motive, independence motive, enterprise motive and psychological motive are also covered. More emphasis is based on the life cycle motive, bequest motive and intergenerational transfer motive and precautionary motive in chapters 3, 4 and 5. Finally, in the concluding chapter the study is used to see if any of the motives can help explain high savings in Singapore. In fact, we observe that these motives do play a role in explaining the pattern of savings.