Expenditure and Disposable Income Trends of UK Households: Evidence from Micro-Data

Abstract

The view that there is an ‘under-savings’ problem in the UK domestic sector has had an important bearing on the contemporary agenda for policy reform. This paper considers the temporal variation of household expenditure and disposable income described by micro-data observed during the past four decades (1971 to 2009). I find a very close correspondence between the growth of expenditure and disposable income over the sample period, with the implication that households have not offset the well-documented decline in occupational pension provisions during the period through increased private saving out of disposable income.