infonet-economy

In this paper, I examine the role of culture for households' saving decisions. Exploiting historical language borders within Switzerland, I isolate the effect of culture from economic, institutional, demographic and geographic factors for a homogeneous and representative sample of households. The analysis is based on the Swiss Household Panel that I complement with geographic and socio-economic data. I show that households located in the Romanic-speaking part (Italian, French) are more than 10 percentage points less likely to save than German-speaking households. I show that these differences are consistent with different distributions of time preferences and norms of taking informal consumer credit in financial distress across language regions.