The savings rate is the ratio of the Household Saving to their Gross Disposable Income.There are two ways of calculating savings rates. The first approach refers to “real” national accounts: savings correspond to the remaining share of income, after substracting all consumer spending. A second approach is to assess savings from financial accounts. Savings are then the result of three components:
Savings rate =
(Financial Investment Rate) + (Non-financial Investment Rate) – (Credit to Income Ratio)
The financial investment rate is te ratio of the net acquisitions of financial products (deposits, fixed income securities, life insurance, etc.) to income. The non-financial investment rate is the ratio of physical investments, mainly real estate (housing and professional investments of individual entrepreneurs), to income. The Credit to Income Ratio corresponds to the increase in indebtedness (new loans minus repayments) over the income.
The two approaches lead to the same result, except for statistical adjustments. The OEE is interested in the second approach in its Overview of Savings in Europe .The analysis of the different components of savings makes it possible to shed light on and compare changes in household behaviours.