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Do the rich save more?

Summary:
Yes, not a surprise but here are some details: We identify a strong negative relationship between the consumption rate and the lifetime net resource. The predicted APC [average propensity to consume] of the highest net resource cohort about 0.03, which is two standard deviations smaller than the lowest resource cohort. That is from a new paper by Ilin, Ye, and Yu (Yu is on the job market).  Of course this relates to the recent wealth tax debate — almost all of that tax would fall on the investment of the wealthy, not their consumption.  Note, however, that if the wealth tax induced more consumption by the wealthy, consumption inequality could quite easily go up. The post Do the rich save more? appeared first on Marginal REVOLUTION.

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Yes, not a surprise but here are some details:

We identify a strong negative relationship between the consumption rate and the lifetime net resource. The predicted APC [average propensity to consume] of the highest net resource cohort about 0.03, which is two standard deviations smaller than the lowest resource cohort.

That is from a new paper by Ilin, Ye, and Yu (Yu is on the job market).  Of course this relates to the recent wealth tax debate — almost all of that tax would fall on the investment of the wealthy, not their consumption.  Note, however, that if the wealth tax induced more consumption by the wealthy, consumption inequality could quite easily go up.

The post Do the rich save more? appeared first on Marginal REVOLUTION.

Tyler Cowen
Tyler Cowen is an American economist, academic, and writer. He occupies the Holbert C. Harris Chair of economics as a professor at George Mason University and is co-author, with Alex Tabarrok, of the popular economics blog Marginal Revolution. Cowen and Tabarrok have also ventured into online education by starting Marginal Revolution University. He currently writes the "Economic Scene" column for the New York Times, and he also writes for such publications as The New Republic, the Wall Street Journal, Forbes, Newsweek, and the Wilson Quarterly.

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