The Effect of Self-Control Mechanisms on Household Saving Behavior

Written By: Jong-Youn Rha, Catherine P. Montalto, and Sherman D. Hanna

The Survey of Consumer Finances was used to assess the explanatory power of self-control mechanisms, controlling for other important constructs from the standard life cycle model of saving. The analysis focused on saving goals, foreseeable expenses, and saving rules as mechanisms of self-control. Household saving behavior was strongly affected by mechanisms that help households practice self-control. Households that had saving rules were much more likely to spend less income than those that did not have saving rules. Key words: behavioral life cycle hypothesis, life cycle hypothesis, saving behavior, self-control, Survey of Consumer Finances

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