Determinants of Household Saving in Australia

Melbourne Institute Working Paper No. 22/99

Date: October 1999


Mark N. Harris
Joanne Loundes
Elizabeth Webster


This paper uses a unique survey of consumers (incorporating the Melbourne Institute Household Savings Survey and the Westpac-Melbourne Institute Survey of Consumer Sentiment) to examine the determinants of Australian household saving. Unit records from 17,700 Australian households are available, which enables the incorporation of a range of household characteristics that may be important factors for saving behaviour, but which are not typically available to researchers undertaking macroeconomic analyses. An ordered probit estimation method is used, and the results support the view that current incomes are perhaps the most important determinant of saving. However, it can also be seen that demographics and householders level of economic optimism play a key role.

Download Paper