Life is full of people who never save, spend like sailors, and find from one day to the next that they’ve maxed out on their credit cards and must cut back on their lifestyle and even long-term investments like their children’s education. Countries are similar. Nations that don’t save sufficiently and finance investment with borrowing from abroad can suffer catastrophes when … [Read more...] about When Too Much External Borrowing to Finance Investment Gets Dangerous
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What Does Saving Have to Do with Resilience to Natural Disasters?
Investing in infrastructure is crucial for a country’s economic performance and growth prospects. In fact, it not only can make a difference in people’s everyday lives by providing better roads and schools, but it can actually save lives. During the last decade, Chile and Haiti provided two contrasting examples of this in the face of earthquakes due to their different levels of … [Read more...] about What Does Saving Have to Do with Resilience to Natural Disasters?
Fighting the Spending Demon
We buy everything we crave at the supermarket; purchase the latest electronic gizmos the minute they appear; and download movies on the internet with abandon. Then we wonder why we have no money for a new car or savings for retirement. What in the world is wrong with us? The truth is that we aren't as morally weak as we think. Science shows that many of us are genetically wired … [Read more...] about Fighting the Spending Demon
Helping Latin Americans Save
Sometimes we need a little push to do things that we know are good for us. We find a “gym buddy” to somehow commit to work out. Or we bet money with a friend on who will be able to spend a month without smoking. When it comes to saving, these nudges are also important for many, even if they are not aware of it. Previous posts explored the main reasons why people in Latin … [Read more...] about Helping Latin Americans Save
Five Reasons Why Latin Americans Save Less
Are Latin Americans less prone to save? When compared to regions with similar levels of economic development, why does Latin America fare poorly in terms of saving rates? Though several factors shape saving rates, a few are particularly important in generating these gaps at the household level. In particular, past experiences, psychological traits, and even genes or language … [Read more...] about Five Reasons Why Latin Americans Save Less