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Location: Macroeconomics Unit II - Aggregate Demand and Aggregate Supply
Discussion: Why don't Americans save?
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tsaojames1991 |
20. RE: Why don't Americans save?
Feb 28 2008, 10:04 AM EST
As an Asian, I was brought with the idea that savings is good because it provides a sense of security. The economic trend of the Asian economy on a whole is more conservative, I would say. People are generally more repelled to the word 'debt' and feels rather empty if their bank account holds no savings at all. Many Asian parents use the saying that 'if you can earn money, you win 50%, but if you can also spend the money, you win 100%" to remind themselves to spend more of their saved money. Saving just matters more to Asians because this is a characteristic that developed as part of its culture. The younger people, however, are becoming more and more like Americans by the nature that they save less also.
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SharonLi |
21. RE: Why don't Americans save?
Feb 28 2008, 10:33 AM EST
Like everyone else has said, there is a cultural aspect to this phenomenon. After retirement, Asians like the safety of knowing that in the future, they will have the money to enjoy life and do whatever they want. On the other hand, Americans may prefer to live for 'now' rather than for 'later'. That was interesting what Kevin Chiu said about advertising in the US compared to China's. Americans do have more advertisement thrown in their faces, so that could also affect consumption. Also, maybe in the US people are scared that prices might rise even further in the future, thus increasing consumption rather than savings?
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ConradLiu |
22. RE: Why don't Americans save?
Feb 28 2008, 10:54 AM EST
The cultural attitude towards the prospect of saving as opposed to consuming is a very influencing factor. Just as many others have already pointed out, Asian families tend to encourage the idea of spending, in order to live a prosperous life during old age. In the United States, however, families try investing in things that will eventually produce profit. My own family, although once bent on the whole "save to live a good life" motto, began to invest in products upon arriving in the United States. So again, although it isn't the ONLY factor, the cultural differences certainly add to the question surrounding American citizen's tendency to not save
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Calvinlu |
23. RE: Why don't Americans save?
Feb 28 2008, 11:27 AM EST
The culture background is really a factor in this situation. Americans are more individual, as they basically live on their own after getting a job of a family, so they have no where to pass down their wealth after they pass away. Therefore, they would most likely to spend all the wealth in their life time. in contrary, asians always has strong bonds with thire family, no matter where they live and what they do, so they tend to save more in order to pass down to the next generation. There's a Chinese saying "肥水不流外人田", basically means that good things shall not leave the family. This show how asian sees them selves as part of a group instead of an individual.
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TimChu |
24. RE: Why don't Americans save?
Feb 28 2008, 9:54 PM EST
Even as incomes have increased, the real wealth of persons in the united states may be less than those in China. Also goods in the states have been increasing in price as time passes by. As for asians and americans, i doubt there is a big difference in savings nowadays. Sure, the stereotypical asian is more thrifty but that isnt the case a lot. Savings ARE important. Many times, more expensive goods require more money saved to buy. That or you could by using mortgage or those savings offers.
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howardlin |
25. RE: Why don't Americans save?
Feb 28 2008, 10:15 PM EST
I think its a cultural issue, i once heard a story about two 70 years old women, two women met when they both came out of the bank, and both were relieved. The American women said: Oh I'm so happy, i have paid up all my debts for my house that i've lived in for thirty years! The Chinese women said: Oh I'm so happy too, I've finally saved up enough money to buy a house! (over a period of 30 years) In this story, you can tell the difference between spending habbits of Asian and American people.
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rksung |
26. RE: Why don't Americans save?
Feb 29 2008, 9:57 PM EST
Well, Asians who are American citizens also receive the social benefits provided by the US government. Like most people said, it is mainly due to the cultural differences. Americans consume more in the present, and might not live as comfortable life as they did before when they are retired.
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KristieChung |
27. RE: Why don't Americans save?
Feb 29 2008, 11:09 PM EST
Like many people have already mentioned, I think a big factor is the cultural difference that Americans and Asians share in the regards of saving. It is a matter of differences in values. Generally speaking, Asians have a tendency to save possibly because they are always preparing for the worst to happen. Also, Americans do have to pay more taxes than Asians, but at the same time, they enjoy more social security benefits in their old age. On the other hand, Asians do not, therefore they need to save more to ensure that they will have enough for their futures. Do you find this valuable? |
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kevinhuang |
28. RE: Why don't Americans save?
Mar 1 2008, 2:54 AM EST
I think "carpe diem" describes the American mindset. If they see a discounted car in the newspaper, they get it. If they notice a special new flavor of jello, they get it. If a new chinese takeout resturant opens right next door, they try it on the opening night. Americans always seize the day and spend, spend, spend, enjoying life at each moment instead of saving up for later. Most Americans depend on their children and the government for when they become elderly.
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drewvenkatraman |
29. RE: Why don't Americans save?
Mar 1 2008, 3:15 AM EST
I believe that since savings can be effectively wiped out with one wave of inflation,as is currently happening in the united States, Americans are afraid to "put all their eggs in one basket." With taht said there is some saving on the American end with stocks and investments in assets that will last a lifetime ( my mom likes diamonds). Maybe this is culture or maybe it is the differing nature of the economies, but savings is useful and necessary in China but not so much in the States
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agoldman |
30. RE: Why don't Americans save?
Mar 1 2008, 3:29 AM EST
One explanation as to why American's aren't good savers is that this habit is cultural. The term "consumer culture" is often used to describe America's spending habits - people in the states can never get enough of what they want. Quite possibly the greatest culprit responsible for this mindset is the media. Advertisements have one purpose, to convince people to buy whatever product is featured. 9 times out of 10, this product isn't a necessity, and essentially becomes another split fiber in the widening hole of the American pocket. Saving is important, we cannot predict with certainty what our financial situations will be like in the future. It seems logical to always reserve some cash in case of a rainy day.
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dayzrox |
31. RE: Why don't Americans save?
Mar 1 2008, 9:08 AM EST
As psychologists often emphasize, almost all behaviors and rationales behind them can never be generalized as people of different cultures have different customs and habits. This rule holds true for an economics related habit: consuming and saving of money. Asians tend to be more cautious of the value of money; they do not like to confront the "if" situations. Thus, they do not like the feeling of being in debt. Following this logic, it's only logical that many Chinese do not pay mortgages but pay the whole amount of money when they buy houses. Furthermore, Koreans are especially vigilant when they come to money as they have faced economic depression that resulted in exorbitant rates of unemployment and inflation in just the last decade. Not only that, Asia, in general, have had later developments. Even in the twentyfirst century, many countries in Asia are still only developing nations. To overcome this relatively slow or recent economic developments and in some ways supercede western nations, Asian nations have also developed a unique set of work ethics: generally speaking, Asians work harder. Also, Asians, as citizens of collectivist societies, tend to think of "we" more than "I" as westerners do. Earning only small amounts of money compared to the effort they put into it(as most Asian nations are still only developing nations), Asians are more cautious of their consumption schedule.
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ma.sheng.lun |
32. RE: Why don't Americans save?
Mar 2 2008, 2:34 AM EST
I agree that culture and ethnicity has a lot to do with saving. A lot of asians have been learned to save their money to face the "if" situation. Also because America was at its peak, so the people would spend a lot of money because they beleive that they will have more money coming in. So if they spend it, it doesn't matter because they will get it back. I also agree that tax may affect the amount of money an american or asian would spend. If you're getting taxed more, then you would have to save more money.
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ChrisFishSeah |
33. RE: Why don't Americans save?
Mar 2 2008, 3:13 AM EST
This has been stated countless times in this thread but... this dichotomy in behavior does lie in cultural differences. Asians are much more prone to save because they are calculative and thrifty by nature; this is no surprise, as up until recently the average local living in Asia was by no means wealthy; it is only now that they are starting to become big earners. With the fact that many governments in Asia do not have proper unemployment benefits or satisfactory financial protection, it should come as no surprise to anyone that Asians save.Contrasting this, Americans have always (for the most part) had money to burn; their GDP remains the highest in the world and their PPP is up there as well. American financial institutions are reliable and are able to protect wealth. This has bred a credit-based culture where people sometimes buy even more than they can afford as a result of the mentality that their economy would always prosper. When I lived in the Silicon Valley and the dot com bubble burst, some of my neighbors had their homes foreclosed as a result of their careless spending. Do you find this valuable? |
CalebLiao |
34. RE: Why don't Americans save?
Mar 2 2008, 4:16 AM EST
Americans don't save because of the spending culture that Americans have grown used to. They are still stuck in the mindset that their economy is the best in the world and that people want their products, but what they don't realize is that all their stuff is coming from Asia, and so they think that the things they invest in, in the states will stay at an appreciated value when the reality is that investments in the U.S. are declining in value. A lot of Americans have used credit cards and also taken mortages out on their houses, but the recent decline of the American housing market and the overwhelming credit card debt in the nation, coupled with the high consumption culture has made it virtually impossible for most Americans to save. Lets not even get started on inflation in general, and specifically oil prices in the U.S.
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mrdaily |
35. RE: Why don't Americans save?
Mar 2 2008, 5:21 AM EST
Of course Americans are naturally more inclined to spend than Asians based on the billions of dollars annually put in to advertisements. Everywhere you look in America there is an ad, and I am sure as many of you, America has a ton of commercials on TV that seem to last longer than TV programs themselves. Thus, when Americans make more money, they can buy more of this useless junk being advertised and pretend that they are better than everyone else because they have it. Also Americans are not exactly the brightest people, and when a commercial says 5 easy payments of $19.99, Americans only hear the $19.99 part. However, in a much stricter and less-advertisement filled environment in Asia the trend is to save more. In general Asian countries value money more than Americans because for the most part, they are surrounded by more poor people. The implications of wild spending are painfully obvious in an Asian society, while Americans can not see what the consequences of spending are. For the most part, I believe the media plays the largest role in spending in the US vs. Asian countries.
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jlau21 |
36. RE: Why don't Americans save?
Mar 2 2008, 6:09 AM EST
Yea, like everybody has said, culture definitely is a big factor. From what i've seen around me, Asians tend to save and Americans tend to use up their money. I guess Americans expect their sons and daughters to provide them with care just like they took care of their children as they grew up. Asians save up money so that when they retire, they have have enough money to last until they die. Being Asian myself, my parents always try to make as much money as possible, especially when it comes to investing in real estate. I guess it is an Asian mindset to make as much money as possible while saving as much as possible at the same time. Another reason why Americans tend to spend more than Asians might be because of the benefits you get when you retire in America. Maybe Americans are satisfied with the money and healthcare they are given by the government. I dont think you get that here in China or anywhere else in Asia.
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J.Chiang |
37. RE: Why don't Americans save?
Mar 2 2008, 7:07 AM EST
I agree with everyone else that it's a cultural thing. Also, I think that Asians tend to save more because it's a matter of security; personally, I would feel a lot better if I knew that I had enough money saved in case anything happened. Although I believe that individuals should spend or save if they want to, overspending is DEFINITELY bad. I don't see how some people can use their credit cards until there's absolutely no money left in it. When you only have a little money left, I believe its time to stop spending and start saving. People should spend a reasonable amount as well as save a reasonable amount. There's no point in having the money if you don't spend it, and many economic problems will arise if you spend too much of your money.
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serenatu |
38. RE: Why don't Americans save?
Mar 2 2008, 7:18 AM EST
Americans aren't like most of the Chinese or Asians. Asians tend to spend less and save more for the future, so they will have a better life when they stop working. However, I think because of cultural differences, most of the Americans like to spend more, they want a a more luxury living in the present? They probably aren't concern with the future once they stop working. They probably just want the present to be good, and leave the future to be unknown.
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MondGu |
39. RE: Why don't Americans save?
Mar 2 2008, 7:35 AM EST
Asians save more because this is embedded in our culture, we are taught to think for the future and always having a back up. I guess, Americans simply focus more in "living in the moment," they solve problems as they arise and its simply hard to save up when you are surrounded by so many desirable goods like a nice tender piece of steak.
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