Discussion Paper No. 665

THE DISSAVING OF THE AGED REVISITED:THE CASE OF JAPANCharles Yuji Horioka

June 2006

The Institute of Social and Economic Research
Osaka University
6-1 Mihogaoka, Ibaraki, Osaka 567-0047, Japan

THE DISSAVING OF THE AGED REVISITED:THE CASE OF JAPANby Charles Yuji Horioka*
Institute of Social and Economic Research, Osaka University, andNational Bureau of Economic Research, Inc.
June 21, 2006
Abstract: In this paper, I survey the previous literature on the saving behavior of the aged in Japanand then present some survey data on the saving behavior of the aged in Japan that became
available recently.

To summarize the main findings of this paper, all previous studies as well as

the newly available data I analyze find that the retired aged dissave and that even the working aged
dissave at very advanced ages.

These findings are consistent with the life cycle model and suggestthat this model is highly applicable in the case of Japan.
Keywords: Saving, dissaving, consumption, aged, elderly, households, life cycle model, life cycle
hypothesis, Japan
Journal of Economic Literature classification numbers: D12, D91, E21

Note: I am indebted to Sung Jin Kang, Oleksandr Movshuk, Junichi Nomura, Tae Okada, Shizuka
Sekita, Shoichi Yamashita, and participants of the Third Workshop on Comparative Analysis ofConsumption and Saving Behavior in East Asian Countries, held at the International Centre for the
Study of East Asian Development (ICSEAD) in Kitakyushu, Japan, on February 5, 2006, for theirvaluable comments and assistance and to the Ministry of Education, Culture, Sports, Science, andTechnology of the Japanese Government for Grant-in-Aid for Scientific Research number
12124207.

*Correspondence to: Charles Yuji Horioka, Institute of Social and Economic Research, Osaka
University, 6-1, Mihogaoka, Ibaraki 567-0047, JAPAN.
Telephone: 81-6-6879-8586, Facsimile: 81-6-6878-2766, E-mail: horioka@iser.osaka-u.ac.jp

1. Introduction
In this paper, I survey the previous literature on the saving behavior of the aged in Japanand then present some survey data on the saving behavior of the aged in Japan that became
available recently.

This is an important topic because the life cycle model posits that people workand save when they are young and retire and dissave when they are old, meaning that analyzing thesaving behavior of the aged can shed light on whether the life cycle model is applicable in the realworld.
To summarize the main findings of this paper, all previous studies as well as the newly
available data I analyze find that the retired aged dissave and that even the working aged dissave atvery advanced ages.

These findings are consistent with the life cycle model and suggest that thismodel is highly applicable in the case of Japan.
This paper is organized as follows: in Section 2, I conduct a selective survey of theprevious literature on the saving behavior of the aged in Japan; in Section 3, I present some survey
data on the saving behavior of the aged in Japan that became available recently; in Section 4, I
present other evidence on the applicability of the life cycle model in the case of Japan; and Section
5 concludes.

2. A Survey of the Previous Literature on the Saving Behavior of the Aged in Japan
Although it is easy to speak about the saving of the aged in theoretical terms, it isnotoriously difficult to measure it in actual practice, and as a result, no consensus has been reachedabout whether or not the aged dissave.

Just to enumerate some of the problems that arise when

one wants to measure the saving of the aged, one problem is that the unit of observation of the data1

that are available is almost always the household, and hence it is not possible to obtain direct dataon the saving of the aged individuals who live in multi-generation households.

This problem is

especially severe in Japan, where there are so many extended families (households in which parents
and their grown children live together).

According to the Population Census of the Japanese

Government, the proportion of the aged who live with their children was a full 73 percent in 1980,
and although this proportion has declined steadily since then, it was still 53 percent in 2000.
Second, households are usually classified by the age of the household head and sinceaged household members are not necessarily the household head (in fact, they usually are notbecause the head is defined as the household member with the highest income), it is difficult to
identify households that have aged members.
Because of these data limitations, previous researchers were forced to look at data on thesaving of households whose head is aged and to make inferences about the saving of all aged
individuals based on these data.
such data.

However, the two aforementioned problems apply in the case ofFirst, such data pertain to the household as a whole and include the saving of not only

the aged head but also of his/her spouse, cohabiting children, cohabiting grandchildren, and so on.
Second, such an analysis totally ignores the saving of aged individuals who are not household heads(primarily aged individuals who live with theirchildren, hereafter referred to as ‘dependent aged’)

and implicitly assumes that their behavior is identical to that of aged heads.

This is a risky

assumption because the majority of the aged in Japan live with their children and are not classified
as the household head and because these dependent aged are very different from the independent
aged (for example, they are presumably considerably poorer, on average).
Thus, even if one finds that households headed by an aged individual in Japan do not2dissave, one cannot conclude that all aged in Japan do not dissave.

For one thing, the failure of the

independent aged to dissave could merely reflect the positive saving of cohabiting children andother cohabiting family members, and for another, aged heads are, on average, more affluent thandependent aged and hence are more likely to be able to save.
The seminal paper by Hayashi, Ando, and Ferris (1988) is an important addition to theliterature on the saving behavior of the aged because it is the first attempt to estimate the saving
behavior of aged persons living in extended families.

The ingenious method they use to indirectly

infer the stock (flow) of saving of such aged is to assume that the stock (flow) of saving of younger
generations living in extended families is identical to that of similarly aged nuclear families and tocompute the stock (flow) of saving of older generations living in extended families as the total stock(flow) of saving of extended families minus the stock (flow) of saving of the younger generation.1
They apply this method to micro data from the 1984 National Survey of Family Income andExpenditure, which is conducted every five years by the Statistics Bureau of the Ministry of Internal
Affairs and Communications of the Government of Japan.
Hayashi, Ando, and Ferris (1988) present the results for both the stock and flow of saving,
but in my opinion, the results for the flow of saving are more reliable because (1) they do not need
to be adjusted for the so-called cohort effect, (2) they do not include intergenerational transfers, and(3) they do not include capital gains and losses, allowing us to focus on out-of-pocket saving.
Therefore, I focus on the results for the flow of saving in what follows.
Hayashi, Ando, and Ferris’s (1988) results show that the flow of saving of the aged livingin extended families is positive for all but the oldest aged (i.e., those aged 87).

Moreover, theirresults for the aged living in nuclear families show that their flow of saving is also positive except

3

for those aged 80 or older.
relatively poor) dissave.

They do find, however, that the single aged of all ages (who areThus, Hayashi, Ando, and Ferris’s (1988) results provide some (but not

overwhelming) support for the life-cycle model, with the majority of the aged in Japan continuing
to save and only the oldest aged (i.e., those aged 80 or older) and the single aged dissaving.
However, the fact that the single aged of all ages dissave and the fact that most aged
dissave eventually (i.e., when they reach their eighties) provide some support for the life-cycle
model.

Moreover, one of the few defects of Hayashi, Ando, and Ferris’s (1988) analysis is that it

fails to control for the employment status of the aged.

The life-cycle model predicts not that all

aged will dissave but rather that the retired aged will dissave, and it is highly likely that Hayashi,Ando, and Ferris (1988) would have found more widespread evidence of dissaving if they had
focused on the retired aged.

Put differently, I believe that the fact that they find any evidence at allof dissaving, even though they include the working aged in their sample, constitutes strong evidence
in favor of the life-cycle model.
One analysis that is closely related to that of Hayashi, Ando, and Ferris (1988) and thattakes account of the employment status of the aged to some extent is that of Ishikawa (1988), whouses data from the Family Saving Survey, conducted by the Statistics Bureau of the Ministry ofInternal Affairs and Communications of the Government of Japan, to analyze the saving behavior ofthe dependent and independent aged in Japan.

Ishikawa (1988) finds that the presence of

cohabiting aged parents has virtually no impact on the saving rate of young households, whichsuggests that aged parents cohabiting with their children are neither saving nor dissaving, but he has
no information on whether the cohabiting parents are working or retired.

However, he can break

down the sample of independent aged into those who are working and those who are retired and4finds that the average total saving rates of salaried workers (including corporate managers),
self-employed and retired independent aged households are 15.8 percent, 11.5 percent, and 1.5
percent, respectively, and that their average financial saving rates are 8.5 percent, 4.7 percent, and–6.9 percent, respectively.

Thus, he finds, as expected, that the saving rates of working and retired

aged are very different, with the former being positive and much higher than the latter, and the latterbeing roughly zero in the case of the total saving rate and negative and large in absolute value in thecase of the financial saving rate.

Thus, the clearest evidence of dissaving by the aged can be foundin Ishikawa’s (19888) analysis of the independent retired aged, which is the only analysis discussed
so far that takes account of the individual’s employment status.
Finally, data from the Household Survey of Financial Asset Choice, conducted by theInstitute of Posts and Telecommunications Policy of Japan Postal, show that the retired aged dissave,on average, in Japan and that even the working aged dissave, on average, after the age of 70 (seeHorioka et al., 1996).

This constitutes even stronger support for the applicability of the life-cycle

model of saving in Japan.

3. Newly Available Data on the Saving Behavior of the Aged in Japan
In this section, I survey newly available survey data on the saving behavior of the aged inJapan.

Unfortunately, no direct data on the saving behavior of the retired aged were available inJapan until recently.

The Family Income and Expenditure Survey, conducted by the Statistics

Bureau of the Ministry of Internal Affairs and Communications of the Government of Japan,
collects information on saving rates (‘ratios of surplus’) by age group of the household head, but the
problem is that, until recently, data on saving rates were collected only for salaried-worker

5households (households in which the household head is a salaried worker).

Thus, even the data foraged households pertained only to aged households whose head was still working as a salaried
worker, and no information was available on the saving rates of the retired aged even though it istheir saving rate that is of most interest.
Table 1 shows data on saving rates by age group of the household head for salariedworker households for the 1990-2004 period, and as can be seen from this table, the saving rates ofaged households (households with a head who is 60 years or above) is lower than that of younger
households but is positive and large in absolute magnitude nonetheless, ranging from 9.4 to 22.6
percent.

Looking at trends over time, the saving rates of aged households declined more or lesssteadily during the 1995-2004 period, from 22.6 percent in 1995 to 9.4 percent in 2004, but was
positive and large in absolute magnitude even in 2004.

However, these figures are not necessarily

contrary to the life-cycle model because they pertain to salaried-worker households, not to retired
households. What is needed is information on the saving rates of retired aged households.
Fortunately, the Family Income and Expenditure Survey started collecting saving rate dataand other data on various categories of aged households, including retired aged households, in 1995.
Thus, it became possible for the first time to know the saving rate of the retired aged.

Table 2shows data on the saving rates of various categories of retired aged households for the 1995-2004
period, and as can be seen from this table, the saving rate of all three categories of retired aged
households is negative and large in absolute magnitude.

For example, the saving rate ofhouseholds with a retired head aged 60 or older ranged from -9.9 to –29.2 percent, that of retired
households all of whose members are aged ranged from -5.2 to -22.0 percent, and that of retired
aged couples ranged from -4.0 to -21.4 percent.

6Trends over time differ from one category of retired aged households to another:The

dissaving rate of households with a retired head aged 60 or older declined slightly from 1995 until
1997 and increased sharply thereafter (in absolute magnitude), while the dissaving rate of retired
households all of whose members are aged and that of retired aged couples fell steadily from 1995
until 2000 and increased sharply thereafter (in absolute magnitude).

Thus, the dissaving rates of

all categories of retired aged households show a downward trend, followed by an upward trend.
The year in which the dissaving rate bottoms out differs by category, but all categories of retired
aged households have shown a trend toward increased dissaving since at least 2000.
A close analysis of the data reveals that the increase in the rate of dissaving is due largely
to the decline in public pension benefits and, to a lesser extent, to an increase in consumption.

For

example, the rate of dissaving of retired aged couples increased (in absolute magnitude) from -4.0
percent in 2000 to -21.4 percent in 2004, and an analysis of the data reveals that 54.1 percent of thisdecline was due to a 10.1 percent decline in public pension benefits and that 34.1 percent of thedecline was due to a 4.9 percent increase in consumption.

Public pension benefits were reduced ina number of ways as part of the 2000 reforms (for example, the earnings-related component was
reduced by 5 percent for new retirees, the wage indexation of benefits was temporarily suspended,
an earnings test was imposed on those aged 65-69, and it was decided to gradually raise thepensionable age from 60 to 65 starting in 2001 (see Horioka (2001) for more details)), and thus it is
not surprising that public pension benefits fell so sharply after 2000.
Note, finally, that there are a number of conceptual defects in the saving rate concept usedin the Family Income and Expenditure Survey.

First, gross concepts of saving and disposable

income (gross of depreciation) are used even though net concepts are preferable.

7

Second, theimputed rent on owner-occupied housing is not included in consumption or in disposable income,even though it should be.

Thus, the saving rate concept used in the Family Income andExpenditure Survey is as follows:
SYG = SG/YDG,
where SYG = gross household saving rate
SG = gross saving
YDG = gross disposable income
Converting saving and disposable income to net terms and adding the imputed rent onowner-occupied housing to disposable income yields the following saving rate:
SYN = (SG – D)/(YDG – D + IR),
where SYN = net household saving rate
D = depreciation on owner-occupied housing
IR = imputed rent on owner-occupied housing
If we assume that depreciation can be calculated as
D = d*H,
where d = depreciation rate
H = market value of owner-occupied housing
and that imputed rent on owner-occupied housing can be calculated as
IR = (r + d)*H,
where r = interest ratethen the “correct” household saving rate can be rewritten as follows:
SYN = (SG – d*H)/(YDG – d*H + (r + d)*H)8which reduces to
SYN = (SG – d*H)/(YDG + r*H)
Thus, the saving concept used in the Family Income and Expenditure Survey is upward biased for
two reasons: because the numerator is upward biased by the inclusion of depreciation and because
the denominator is downward biased by the exclusion of the foregone interest income from holding
one’s wealth in the form of owner-occupied housing.

Correcting these biases would cause thedissaving rates of the retired aged in Japan to be even larger in absolute value than the unadjusted
figures suggest.
We look finally at the rate of financial decumulation of retired households, which isdefined as the ratio of net financial saving (net purchases of financial assets minus the net increasein liabilities) to beginning-of-period financial net worth (holdings of financial assets minus
liabilities outstanding).

I do not look at the rate of total decumulation because no data are

available on the stock of real assets (land/housing) and because most Japanese households do not
draw down their stock of real assets (land/housing) during retirement.

Table 3 shows the rate offinancial decumulation of households with a retired head aged 65 or older for the 1995-2004 period,
and as this table shows, the rate of financial decumulation of such households ranged from 0.84 to
2.26 percent, which implies a time horizon of 44 to 118 years if we assume that households will
decumulate at a constant rate from now until they pass away.

Thus, retired households in Japan

decumulate their financial saving, as predicted by the life-cycle model.

Their rates of financial

decumulation seem low at first glance but they are in the right ballpark if we take account of thedefect in the saving data noted earlier (the upward bias caused by the inclusion of depreciation),
lifespan uncertainty, and/or the presence of a bequest motive.

9

As for trends over time in the rate of financial decumulation of retired households, itdeclines until 1998, shows no clear trend between 1998 and 2001, then shows an upward trend
thereafter (all in absolute magnitude); thus, trends over time in the rate of financial decumulation ofretired households are broadly consistent with trends over time in the saving rates of suchhouseholds.
Thus, it appears that the tendency of the retired aged in Japan to dissave has always been
observed (at least since 1995) and that this tendency has become even more pronounced in recent
years.

This suggests that the life-cycle model of saving is highly applicable in Japan and that it

has become even more applicable in recent years.

4. Other Evidence on the Applicability of the Life Cycle Model in Japan
Note, moreover, that various other types of data and evidence also provide strong support
for the applicability of the life-cycle model of saving in Japan (see, for example, Hayashi, 1986,
1997; Horioka, 1984, 1993, 2002; and Horioka et al., 2000).

For example,

Horioka and

Watanabe (1997) decompose total household saving in Japan into saving for individual motives andfind that saving for retirement is by far the largest component, accounting for a full 62.5 percent of
total household saving.
As another example, econometric analyses based on time series data as well as
cross-country data (see, for example, Horioka, 1989, 1997) provide strong evidence that the age
structure of the population has a significant impact on household, private, and national saving rates,
as predicted by the life-cycle model of saving.
As yet another example, Horioka (2002) and Horioka et al. (2000) find that the vast10

majority of bequests in Japan are either unintended or accidental, arising from lifespan uncertainty
or are selfishly motivated bequests that are left in exchange for care, attention, and/or financial
assistance provided by one’s children during old age, both of which are consistent with thelife-cycle model of saving.
As a final example, Movshuk (2006) finds evidence of a double-humped age-saving
profile in Japan as well as in the other countries he studies, and although his results do not yield
information on the absolute level of the saving rate at each age, the sharp decline he finds at older
ages strongly suggests that the saving rate becomes negative.

5. Conclusion
In this paper, I surveyed the previous literature on the saving behavior of the aged in Japanand then presented some survey data on the saving behavior of the aged in Japan that became
available recently.

To summarize the main findings of this paper, all previous studies as well as

the newly available data I analyze have found that the retired aged dissave and that even theworking aged dissave at very advanced ages.

These findings are consistent with the life cycle

model and suggest that this model is highly applicable in the case of Japan.
I turn next to directions for further research.

Few studies have examined the saving

behavior of the dependent aged (the aged who live with their children) in Japan (the only ones ofwhich I am aware are Hayashi, Ando, and Ferris (1988) and Ishikawa (1988)), and moreover, noneof these studies have looked at the saving behavior of the retired dependent aged.

Since theproportion of the aged who live with their children is still high (about one-half) in Japan and since a
crucial implication of the life cycle model is that the retired aged dissave, it is important to analyze
the saving behavior of the retired dependent aged and to examine whether they dissave, as predicted11

by the life cycle model.
I turn finally to the policy implications of my findings.

Japan’s population is aging at thefastest rate in human history and Japan will soon have the most aged population in the world.

Myfinding that the (retired) aged dissave in Japan implies that this rapid population aging will cause asharp decline in Japan’s household saving rate. Since Japan’s household saving rate had alreadyfallen to 2.6 percent by 2004, according to national accounts data, a further decline implies thatJapan’s household saving rate, which was formerly one of the highest in the world, will soon
become negative.

References

Hayashi, Fumio (1986), “Why Is Japan’s Saving Rate So Apparently High?” NBER
Macroeconomics Annual 1986, vol. 1, pp. 147-210.

______________ (1997), Understanding Saving: Evidence from the United States and Japan(Cambridge, Massachusetts: MIT Press).

_______________; Ando, Albert; and Ferris, Richard (1988), “Life Cycle and Bequest Savings: A
Study of Japanese and U.S. Households Based on Data from the 1984 NSFIE and the 1983 Surveyof Consumer Finances,” Journal of the Japanese and International Economies, vol. 2, no. 4(December), pp. 450-491.

12

Horioka, Charles Yuji (1984), “The Applicability of the Life-Cycle Hypothesis of Saving to Japan,”
Kyoto University Economic Review, vol. 54, no. 2 (October), pp. 31-56.

___________________ (1989), “Why Is Japan's Private Saving Rate So High?” in Ryuzo Sato andTakashi Negishi, eds., Developments in Japanese Economics (Tokyo: Academic Press/Harcourt
Brace Jovanovich, Publishers), pp. 145-178.

___________________ (1993), “Saving in Japan,” in Arnold Heertje, ed., World Savings: An
International Survey (Oxford, UK, and Cambridge, USA: Blackwell Publishers), pp. 238-278.

___________________ (1997), “A Cointegration Analysis of the Impact of the Age Structure of the
Population on the Household Saving Rate in Japan,” Review of Economics and Statistics, vol. 79, no.
3 (August), pp. 511-516.

___________________ (2001), “Japan’s Public Pension System in the Twenty-first Century,” in
Magnus Blomstrom, Byron Gangnes, and Sumner LaCroix, eds., Japan’s New Economy: Continuity
and Change in the Twenty-first Century (New York: Oxford University Press), pp. 99-119.

13

___________________ (2002), “Are the Japanese Selfish, Altruistic, or Dynastic?” Japanese
Economic Review, vol. 53, no. 1 (March), pp. 26-54 (the 2001 JEA-Nakahara Prize Lecture).

___________________; Fujisaki, Hideki; Watanabe, Wako; and Kouno, Takatsugu (2000), “AreAmericans More Altruistic than the Japanese?

A U.S.-Japan Comparison of Saving and Bequest

Motives,” International Economic Journal, vol. 14, no. 1 (Spring), pp. 1-31.

___________________; Kasuga, Norihiro; Yamazaki, Katsuyo; and Watanabe, Wako (1996), “Do
the Aged Dissave in Japan? Evidence from Micro Data,” Journal of the Japanese and International
Economies, vol.10, no. 3 (September), pp. 295-311.

___________________ and Okui, Megumi (1999), “A U.S.-Japan Comparison of the Importanceand Determinants of Retirement Saving,” Economics Letters, vol. 65, no. 3 (December), pp.
365-371.

___________________ and Watanabe, Wako (1997), “Why Do People Save?

14

A Micro-Analysis

of Motives for Household Saving in Japan,” Economic Journal, vol. 107, no. 442 (May), pp.
537-552.

___________________; Yamashita, Koji; Nishikawa, Masashi; and Iwamoto, Shiho (2002), “On
the Importance, Nature, and Impact of Bequests in Japan,” mimeo., Institute of Social andEconomic Research, Osaka University.

Ishikawa, Tsuneo (1988), “Saving and Labor Supply Behavior of Aged Households in Japan,”
Journal of the Japanese and International Economies, vol. 2, no. 4 (December), pp. 417-449.

Movshuk, Oleksandr (2006), “Household Savings through Life Stages: Evidence from Micro Data,”
mimeo., Faculty of Economics, Toyama University.

15

Table 1: Saving Rate by the Age Group of the Household Head, 1990-2002
Calendar
29 years or
30-39
40-49
50-59
Year
All agesyounger
years
years
years
60 or older
1990
24.7
24.0
27.1
24.0
25.1
19.0
1991
25.5
25.8
27.2
25.1
25.9
21.0
1992
25.5
26.0
28.3
25.2
24.7
20.7
1993
25.7
25.3
29.0
24.9
24.9
22.6
1994
26.6
27.6
28.5
25.2
28.2
20.5
1995
27.5
28.0
31.3
25.4
28.3
22.6
1996
28.0
28.1
31.4
27.1
21.8
28.4
1997
28.0
31.3
26.9
28.3
22.4
30.4
1998
29.5
32.8
28.0
22.5
28.7
28.7
1999
28.5
28.8
32.7
28.5
27.3
21.0
2000
27.9
25.9
32.3
26.8
17.9
29.1
2001
27.9
24.0
27.5
27.0
18.4
33.8
2002
26.9
26.1
33.3
27.8
25.5
13.7
2003
26.0
28.4
32.3
27.0
24.1
12.1
2004
25.6
24.6
31.4
27.9
23.5
9.4
Notes: The figures show the saving rates ("ratios of surplus") of salaried worker
households.
Source: Statistics Bureau, Ministry of Internal Affairs and Communications, Governmentof Japan, ed., Annual Report on the Family Income and Expenditure Survey (Tokyo：
Japan Statistical Association), various editions.

16

Table 2: The Saving Rate of the Retired Aged in Japan
Calendar
Retired aged
Retired aged
year
households (1)households (2)Retired aged couples
1995
-11.5
-9.2
-9.3
1996
-10.8
-6.0
-5.8
1997
-9.9
-6.3
-5.1
1998
-11.3
-6.1
-5.4
1999
-14.6
-7.4
-6.0
2000
-16.2
-5.2
-4.0
2001
-20.4
-14.5
-14.3
2002
-26.0
-19.6
-18.3
2003
-24.6
-16.4
-15.7
2004
-29.2
-22.0
-21.4
Notes: The figures show saving rates ("ratios of surplus"). "Retired aged
households (1)" denote households in which there is at least one member who is
60 years or older. "Retired aged households (2)" denote households in which all
males are 65 years or older, all females are 60 years or older, and there is atleast one member who is 65 years or older. "Retired aged couples" denoteretired couples in which the husband is 65 years or older and the wife is 60
years or older.
Source: Statistics Bureau, Ministry of Internal Affairs and Communications,
Government of Japan, ed., Annual Report on the Family Income andExpenditure Survey (Tokyo： Japan Statistical Association), various editions.

17

Table 3: Rates of Financial Decumulation of Households with a Retired Head Aged 65 or Older

Calendar Year

Financial Saving(1000 yen)

1995
1996
1997
1998
1999
2000
2001
2002
2003
2004

-376.74-406.54-332.66-176.93-299.10-349.74-228.71-313.62-280.31-514.32

Rate of Financial
Implied Time Horizon
Decumulation(years)(percent)
22,574
1.67
59.92
22,0781.84
54.31
22,371
1.49
67.25
20,9580.84
118.4520,7581.44
69.40
24,0501.45
68.77
25,1130.91
109.8023,702
1.32
75.58
22,2901.26
79.52
22,735
2.26
44.20

Financial Net
Worth (1,000 yen)

Notes: Financial saving is defined as net purchases of financial assets minus the net increase inliabilities, financial net worth as holdings of financial assets minus liabilities outstanding, and the rateof financial decumulation as the negative of the ratio of financial saving to beginning-of-year financial
net worth, and the implied time horizon as the reciprocal of the rate of financial decumulation..
Since 2002, holdings of financial assets and liabilities outstanding are available for the year as a wholeonly. I estimated beginning-of-year financial worth for 2002 by taking the average of the beginningof-year figures for 2001 and 2003. I estimated beginning-of-year financial net worth for 2003 and2004 by taking the average of the previous year's figure for the year as whole and the current year's
figure for the year as a whole.
Sources: Statistics Bureau, Ministry of Internal Affairs and Communications, Annual Report on the
Family Income and Expenditure Survey (Income and Expenditure (Two-or-More-Person
Households) and Savings and Liabilities , various issues, and Statistics Bureau, Ministry of Public
Management. Home Affairs, Posts and Telecommunications, Family Saving Survey , various issues.
Both are published by Tokyo: Japan Statistical Association.

18

Endnotes

1

Hayashi et al. (1988) also use another method in which they examine how the stock (flow) ofsaving of extended families in which the younger generation is of a certain age changes as the ageof the older generation increases, but the results based on this method are not discussed here due tospace limitations.

19