UK-born grandchildren of immigrants tend to mirror the money saving behaviour of their grandparents’ country of birth, a new study from the London School of Economics and Political Science (LSE) published in the PLOS ONE journal has found.
The study, which is the first of its kind to find a link between culture and money saving behaviour, used long-term data to explore the saving habits of UK migrants, their children and their grandchildren and found that culture impacts on money saving behaviour for up to three generations.
The researchers found that despite living under different economic and institutional conditions – such as a different tax and welfare system – to their country of birth, the money-saving behaviour of migrants and their children and grandchildren still tended to reflect that of their birth country.
For example, the UK-born children and grandchildren of people born in countries with high saving rates – such as China – tended to save at a higher rate. Likewise, the children and grandchildren of those from countries with low-saving rates tended to save at a lower rate.
The researchers suggest this is because different cultures place different levels of importance on saving which leads to ingrained saving behaviours and norms which continue to influence people’s behaviour outside of their birth country. These norms are then passed down the generations through what the researchers call ‘intergenerational cultural transmission’, where parents pass their beliefs and values onto their children.
Commenting, Dr Berkay Ozcan from the Department of Social Policy at LSE said:
“This study is important because it contributes to understanding the determinants of saving behaviour. Social scientists have been trying to understand determinants of saving behaviour in order to design various policies, such as retirement and pension policies, which are aimed at increasing savings. Our research shows that culture is an important determinant and should be taken into account when designing incentives and policies for saving behaviour.”