If you are a smoker, or overweight, chances are you are probably not saving enough for retirement, according to the results of a new research study by CEIBS Zhongkun Group Chair Professor of Finance Henrik Cronqvist and Associate Professor Stephan Siegel of the University of Washington’s Michael G. Foster School of Business.

In their study, the researchers sought to better understand why some of us are better at saving money. Is savings behaviour genetic? Is it instilled in us by our parents? Or is it the result of our individual life experiences? With many countries now transitioning away from pensions and defined benefit plans to defined contribution plans such as 401(k) and private retirement accounts, workers are becoming more responsible for their own savings, which is among the reasons why it is important for economists to better understand the origins of savings behaviour.

Among their findings:
- We are born with a genetic predisposition towards a certain savings behaviour;
- Smokers, and those who are overweight, tend to have less self-control, and this trait carries over into their savings behaviour as well;
- Parenting contributes somewhat to our savings behaviour when we are young. However as we reach middle-age, this has less influence and we tend to either fall back on what we are genetically programmed to do or are influenced by other factors;
- An individual’s adult savings behaviour is more affected by their genes if they grow up in a wealthier family;
- There’s no significant correlation between education and savings behaviour.

The researchers conducted their study by matching data on a large number of identical and fraternal twins from the Swedish Twin Registry, the world’s largest twin registry, with annual data from these twins’ tax filings. Their results appear in the paper “The Origins of Savings Behaviour” which will be published by the Journal of Political Economy.

View the paper

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