institutionalized it by devising social security and pension systems designed to
provide income support after retirement. In addition, many countries have adopted
policies that aim to encourage saving: for example, via tax incentives or education
Ideally, we would estimate a structural model of such an extended life-cycle
model of saving as a function of pension policies, tax rules, and all the other many
determinants of saving at the household level. While estimating such a dynamic
life-cycle optimization model on cross-national data is not a realistic goal for this
International Savings Comparison Project, our work has been guided by such a
frame of thinking.
More modestly, this volume fulfils two tasks. The first is descriptive: the country
chapters (Chapters 3–8) collect the main saving measures by age and cohort, subject
to a common treatment of time effects and a common definition of the various
saving components. This provides very valuable data, which we make available to
other researchers and/or policymakers. The second task is interpretation: we will try
to link saving patterns to country-specific policies, such as pension policies, other
parts of the social safety net, financial market features, and capital taxation.
The first task of measuring saving in each stage of the life cycle is based on the
definitions and procedures described in Chapter 2. Each country team collected
data on saving and related measures according to a tightly specified ‘‘template.’’
Although these accounting definitions may appear tedious, they are a crucial
necessity for a meaningful cross-national comparison.
In principle, there are three different ways of measuring saving:
. by comparing asset holdings at the beginning and at the end of a period;
. by adding inflows and outflows of wealth ac counts during one period;
. by taking the difference between income and consumption expenditures in a
There are several measurement issues to deal with when examining saving; for
example, should wealth and income incorporate unrealized capital gains? Which
measure is more appropriate to use depends ultimately on the research question
under consideration, but also data availability. Given that our focus is to study life-
cycle saving, all resources that can be used to support households over the life cycle
are relevant for our analysis. We will therefore work with the most comprehensive
measure of saving which differs from aggregate statistics from the national income
and product ac counts that exclude many components of saving, most notably,
unrealized capital gains on assets.
To measure and study saving behavior, when possible, we distinguish between
active and passive saving. Passive saving is capital gains that are automatically
10 Chapter 1 Saving: A Cross-National Perspective

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