How do you get men to save? (Hint: it has to do with women and sex.)

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.

Source: “A Sexually Unbalanced Model of Current Account Imbalances” from NBER Working Paper No. 16000

Join 25K+ readers. Get a free weekly update via email here.

Related posts:

What 10 things should you do every day to improve your life?

What do people regret the most before they die?

What five things can make sure you never stop growing and learning?


Tags:
Posted In:
Post Details