Think Like An Economist
S E30: Consumption and Saving - Spend Now or Save to Spend Later
Feb 16, 2021
18:46
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Quick takeaways
- German households significantly increased their savings during the Covid-19 pandemic, emphasizing the tendency to save more during times of uncertainty.
- Consumption smoothing involves evenly distributing spending over one's lifetime, considering factors like borrowing during low-income periods and saving during peak earning stages.
Deep dives
Germans have a high saving rate
Germans have one of the highest saving rates in the world, with households typically saving at least around ten % of their income, and often much more. During the Covid-19 pandemic, German households increased their savings even further, reaching a savings rate of 28% in March 2020. This highlights how people tend to save more during times of uncertainty.
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