Why Don’t Households Save in the Same Way?

Published in the Journal of Finance, an FT50-ranked journal widely regarded as one of the leading academic publications in finance, the article was written with John Y. Campbell, Professor at Harvard University, Francisco Gomes, Professor at London Business School, and Paolo Sodini, Professor at the Stockholm School of Economics.

The researchers analysed the income, wealth and investment portfolios of a large panel of Swedish households. They examined three key dimensions shaping financial decision-making: risk aversion, present bias, and the propensity to adjust consumption or savings in response to changes in returns.

Time Preferences at the Heart of Financial Decisions

The findings show that although risk aversion varies across households, the most significant differences lie in the way people value the future. Households with the lowest levels of wealth at the beginning of the study period tended to place greater emphasis on the present and were less likely to adjust their savings behaviour when investment returns changed. “Our findings show that households differ not only in their willingness to take risks. The largest differences are found in how they value future consumption and adjust their saving decisions. Understanding these differences is essential for analysing portfolio choices and wealth accumulation,” explains Laurent E. Calvet.
 

Laurent E. Calvet is a member of SKEMA Business School’s Finance and Accounting Insights on Risk and Regulation (FAIRR) Research Centre. His research focuses on asset pricing, household finance and financial econometrics.
 

The article, “The Cross-Section of Household Preferences”, was published online on 23 July 2026.