Propensity to save for old age in Hungary

Abstract

THE AIMS OF THE PAPER

This paper examines the propensity to save for old age according to age and the ability to save in Hungary. The study introduces the environmental factors determined by the pension system shortly, but the aim of the paper is to analyse the human factors which determine the saving attitude and the ability of the respondents.

METHODOLOGY

I use a logistic regression model, which examines saving attitude across age and the relation between the ability and the propensity to save for old age. The dependent variable of the model investigates whether the respondents had savings for old age in the last twelve months. The ability is proxied by the possibility of coming up with emergency funds. The analysis is based on the Global Financial Inclusion Questionaire (2017).

MOST IMPORTANT RESULTS, NEW FINDINGS

The most important finding of the paper is that older people have a higher propensity to save than younger people. In Hungary the proportion of old age dedicated savings is the highest in the 56-65 cohort. Furthermore, I find that people with a possibility of coming up with emergency funds have savings for old age with a higher probability than people who cannot come up with emergency funds. Thus I find a positive relation between the propensity and the ability to save for old age.

EMPIRICAL IMPLICATIONS OF THE RESEARCH

This research shows that the proportion of people who save for old age is low in Hungary. Only 25.7% of people have old age dedicated savings, but this proportion is not higher worldwide either. This result raises the question whether it is the fault of the pension system, or the constraints of the human nature drives the phenomenon.