I've mentioned before that there is no national savings rate crisis. Turns out I have not shared any details on the blog. Here's an article explaining the savings rate bogusosities that was picked up by Knight-Ridder a while back.
What stimulated this was Alastair Walling's post in the Market-Based Management blog pointing out that when processes change, the metrics we use to evaluate results may also need to change. It's a good point (though I don't think he really understands the savings rate.)
Bill, thanks for posting this. I love "bogusosities" by the way. I've always assumed something was broken behind the scenes but didn't know what. Why keep reporting it though if it's so completely mangled?
Posted by: Shane Milburn | May 07, 2007 at 09:30 PM
The official savings rate is not easily fixed. Part of the problem is caused by accountants saying that the employer's contribution to your retirement account is income at the time the contribution is made. That means the same money cannot be counted when it's paid out to you in a pension.
If I were data czar, I'd keep reporting the savings rate, but perhaps as an index number. The official rate does not tell us how much of our income we're saving. But changes in the savings rate over time do reflect a rough estimate of changes in saving over time.
Posted by: Bill Conerly | May 08, 2007 at 08:00 AM