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Empirical estimates suggest that in developing countries people with higher wealth (permanent income) have higher savings rates. However these results do not mean that individuals with greater wealth have higher propensities to save out of current income. To the contrary, a simple permanent income model implies that, conditional on the same level of current income, the more wealthy save less. Empirical estimates for the developing country of Thailand are consistent with this model in that the propensity to save out of current income is inversely associated with measures of physical and human resource wealth. Such estimates suggest that care must be taken in interpreting the large number of studies that explore the association between savings and current income without controlling for the impact of wealth.


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