Monday, May 24, 2010

Freakonomics: Gender imbalances and savings rates 

Why do some cultures save more money than others? A surplus of males!

Large savings and current account surpluses by China and other countries are said to be a contributor to the global current account imbalances and possibly to the recent global financial crisis. This paper proposes a theory of excess savings based on a major, albeit insufficiently recognized by macroeconomists, transformation in many of these societies, namely, a steady increase in the surplus of men relative to women. We construct an OLG model with two sexes and a desire to marry. We show conditions under which an intensified competition in the marriage market can induce men to raise their savings rate, and produce a rise in the aggregate savings and current account surplus. This effect is economically significant if the biological desire to have a partner of the opposite sex is strong. A calibration of the model suggests that this factor could generate economically significant current account responses, or more than 1/2 of the actual current account imbalances observed in the data.

File under "the unanticipated consequences of infanticide."


By Blogger MTF, at Tue May 25, 08:10:00 AM:

So, If a guy can't get a date on Friday night he just stays home and salts the money away? File that under "Unsurprising News", I guess.

I suppose further research would tell us that those same men are saving less or not at all if they are paying tuition bills.  

By Anonymous tyree, at Tue May 25, 06:07:00 PM:

All governemnt programs have "unanticipated consequences". Which is why we shouldn't believe them when they say they know what they are doing.  

By Blogger Bomber Girl, at Tue May 25, 07:22:00 PM:

"surplus of males" is an oxymoron. Just sayin'.  

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