The Saving Behaviour of Children: Analysis of British Panel Data

We explore the influences on the saving behaviour of children aged 11 to 15 using panel data drawn from the British Household Panel Survey Youth Questionnaire. Our empirical findings suggest that parental allowances/pocket money exert a moderating influence on the probability that a child will save, whilst hours of paid work undertaken by the child are positively associated with the probability that a child will save. The saving behaviour of parents, however, does not appear to influence the saving behaviour of their offspring. In contrast, financial optimism on the part of parents does appear to lower the probability that their children will save. In addition, our empirical analysis reveals some interesting differences relating to the determinants of the saving behaviour of boys and girls as well as evidence of state dependence in the saving behaviour of children.