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Japan: A culture of savers?

Written By: Jason Shafrin - Aug• 17•07

Many economists claim that Americans are spendthrifts and for good reason. The average American has over $9000 of credit card debt. Why don’t we act more like the Japanese and save?

A NBER working paper by Charles Yuji Horioka, Wataru Suzuki, Tatsuo Hatta claim that Japan’s high saving rates in the 70s and 80s were mainly due to demographics and not to the fact that the Japanese are inherently a culture of savers.

The Facts

In the 70s, 80s, and even 90s, Japan has ranked as one of the top OECD countries in terms of savings rates. In 1975 Japan ranked #1 in the OECD in terms of net household savings; in 1980 and 1985, Japan ranked #2, just behind Italy. Today, their saving rate has declined from 23% in 1975 to 4% in 2005.


The authors claim that the reason why the national savings rate was so high was due to demographics. In the 1970s and 1980s, a large share of Japan’s population was made up of working adults. The dependency ratio was exceeding low. Since working adults are savers, having a low dependency ratio will lead to high national savings rates.

In the near-term and intermediate-term future, Japan will age rapidly. Currently, 20.6% of Japan’s population is over 65, but this figure will rise to 35.7% by 2050. Since working adults are savers, while the elderly and young spend more than they earn, the authors predict the savings rate to fall precipitously in the near future. In 1975, the net household savings rate was about 23%. The net savings rate stayed above 15% until the late 1980s. By 2005, as the population has aged, the savings rate has fallen below 5%.


It seems that the Japanese are not such a frugal culture as Americans once though. It also turns out that most Americans (55%) have $0 credit card debt and that the median person with credit card debt only owes $2200 (according to the Bean Counter Blog). As usual, those who we hold up as idols are never really as good as we first think; those we demonize are typically not as bad as we first think.


The authors wisely note that “Japan’s saving rate can be expected to decline sharply as its population ages. However, aging will also raise the saving rate of individuals due to the existence of a pay-as-you-go public pension system.”

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