Savers on the Verge of Crisis

Luc ARRONDEL * Directeur de recherche, CNRS, Paris School of Economics (PSE). Contact : luc.arrondel@psemail.eu.

Vladimir BORGY DGEI-DCPM-FIPU, Banque de France.

Frédérique SAVIGNAC DGEI-DEMS-SAMIC, Banque de France.

Savers evolve today in a difficult environment : financial and economic crisis, macroeconomic risk related to the future of the welfare system, tax reforms, Welfare State reform seeking to further empower the individual... Consequently, savers invest in safe and short-term assets at the expense of long-term and risky investments. Moreover, this prudent behavior could also be accelerated by the recent increase in the limits on savings accounts. According to some, these trends could lead to a problem of financing the economy.

Using individual data, we show that this prudent behavior does not concern everybody: wealthier and older people hold a large fraction of their wealth in risky and long-term assets. In addition, prudence behaviors during the crisis was due to lower expectations regarding incomes and stock prices of assets, a more pessimistic outlook of the future on the labor market, not to an increase in risk aversion.

So, in order to encourage investors to take more risk, one scenario would be that the State (Welfare) continues to protect individuals against new macroeconomic risks.