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Religion and Economic Outcomes – Household Savings Behavior in the USA

Author

Listed:
  • Anja Koebrich Leon

    (Institute of Economics, Leuphana University Lueneburg, Germany)

Abstract
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.

Suggested Citation

  • Anja Koebrich Leon, 2013. "Religion and Economic Outcomes – Household Savings Behavior in the USA," Working Paper Series in Economics 268, University of Lüneburg, Institute of Economics.
    • Handle: RePEc:lue:wpaper:268
    as

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    References listed on IDEAS

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    1. Savings and religion II
      by Economic Logician in Economic Logic on 2013-06-05 19:24:00

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    More about this item

    Keywords

    savings behavior; cultural origin; religion;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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