Commitments in Marriage and Under-Savings

Wataru Kureishi, National Institute of Population and Social Security Research, Japan
Midori Wakabayashi, Osaka Prefecture University

Many recent studies on behavioral economics have been shown that self-control or time inconsistency are the catalysts for that people save less than they think they should. If people are sophisticated enough to recognize their time inconsistent tendency, they can avoid the temptation to overindulge or spend too much in the present by putting their saving or consumption decisions in the hand of the other household members who have self-control and can behave in time-consistent ways. In this paper, at first, we descriptively clarify how different the household saving decisions are handed over to spouses between married individuals who exhibit hyperbolic time discounting and those who do not. And then, we test the hypothesis that married individuals who exhibit hyperbolic time discounting and leave their saving decision to their spouses are more likely to save close to the amount of financial asset they would have wanted to save.