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Köbrich León, Anja
Year of Publication: 
Series/Report no.: 
University of Lüneburg Working Paper Series in Economics 268
Assuming that certain religious beliefs, as a proxy for one's cultural background, may inhibit wealth accumulation, individual savings behavior in the USA with its vital religious market is examined. Using data from the US Panel Study of Income Dynamics (PSID), I found notable differences in saving rates and in the amount saved between religious and non-religious individuals as well as across religious groups. However, neither the fixed-effects approach nor the instrumental variables estimation, where the religious composition of the region of ancestry origin is used as an instrument for individual religious belief, support the findings from cross-sectional analysis. The longitudinal analysis yields no effect of religious belief on savings choices. Frequent religious church attendance, however, positively affects savings decisions. Further, based on the exogenous variation in religious composition of ancestry region, the instrumental variables approach shows that religious affiliation determines the binary savings decision negatively. However, the instrument is not valid for the continuous savings decision.
savings behavior
cultural origin
Document Type: 
Working Paper

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