Expenditure and Disposable Income Trends of UK Households: Evidence from Micro-Data

Abstract

The view that there is an ‘under-savings’ problem in the UK domestic sector has had an important bearing on the contemporary agenda for policy reform. This paper considers the temporal variation of household expenditure and disposable income described by micro-data observed during the past four decades (1971 to 2009). I find a very close correspondence between the growth of expenditure and disposable income over the sample period, with the implication that households have not offset the well-documented decline in occupational pension provisions during the period through increased private saving out of disposable income.

Keywords

Under-saving retirement expenditure disposable income

Get full access to this article

View all access options for this article.

References

Atkinson

A.B.

(2007), ‘The distribution of top incomes in the United Kingdom 1908—2000’, In Atkinson

A.B.

Piketty

(eds), Top Incomes of the Twentieth Century, Oxford, Oxford University Press.

Atkinson

A.B.

Micklewright

(1983), ‘On the reliability of income data in the Family Expenditure Survey 1970—1977’, Journal of the Royal Statistical Society, Series A, 146, pp. 33—61.

Attanasio

O.P.

Battistin

Leicester

(2006), ‘From micro to macro, from poor to rich: consumption and income in the UK and the US’, Paper presented at the “Consumption, Income, and the Well-Being of Families and Children” Conference, Washington, D.C., May.

Attanasio

O.P.

Weber

(2010), ‘Consumption and saving: models of intertemporal allocation and their implications for public policy’, Journal of Economic Literature, 48, pp. 693–751.

Auerbach

A.J.

Gokhale

Kotlikoff

L.U.

(1994), ‘Generational accounting: a meaningful way to evaluate fiscal policy’, Journal of Economic Perspectives, 8, pp. 73–94.

Auerbach

A.J.

Kotlikoff

L.U.

(1987), Dynamic Fiscal Policy, Cambridge, Cambridge University Press.

Banks

Johnson

(1998), How Reliable is the Family Expenditure Survey, London, Institute for Fiscal Studies.

Department for Work and Pensions (DWP) (2006), Security in Retirement: Towards a New Pensions System, Norwich, The Stationery Office.

Foster

(1996), ‘A comparison of the Census characteristics of respondents and non-respondents to the 1996 FES’, ONS Survey Methodology Bulletin, 38.

10.

Kemsley

Redpath

Holmes

(1980), Family Expenditure Survey Handbook, London, OPCS, Social Survey Division.

11.

Khoman

Weale

(2006), ‘The UK savings gap’, National Institute Economic Review, 198, pp. 97–111.

12.

Khoman

Weale

(2008), ‘Are we living beyond our means? A comparison of France, Italy, Spain and the United Kingdom’, National Institute Discussion Paper No. 311.

13.

Leicester

O'Dea

Oldfield

(2009), The Expenditure Experience of Older Households, London, Institute for Fiscal Studies.

14.

McCarthy

Sefton

Weale

(2011), ‘Generational accounts for the United Kingdom’, National Institute Discussion Paper No. 377.

15.

National Equality Panel (2010), An Anatomy of Economic Inequality in the UK, London, Government Equalities Office.

16.

Pensions Commission (2004), Pensions: Challenges and Choices, The First Report of the Pensions Commission, Norwich, The Stationery Office.

17.

Pensions Commission (2005), A New Pension Settlement for the Twenty-First Century, The Second Report of the Pensions Commission, Norwich, The Stationery Office.

18.

Pomerantz

Weale

(2005), ‘Are we saving enough? The macroeconomics of the savings gap’, National Institute Economic Review, 191, pp. 79–93.

19.

Scholz

J. K.

Seshadri

Khitatrakun

(2006), ‘Are Americans saving “optimally” for retirement?’, Journal of Political Economy, 114, pp. 607–43.

20.

Weale

(2004), ‘National saving and the stability and growth pact’, National Institute Discussion Paper No. 246.