HOUSEHOLD ECONOMIC PRUDENCE IN THAILAND

The countercyclical pattern of saving in Thailand in the 1990s and 2000s raised questions about household saving behaviors in the country. Using constructed pseudo-panel data sets from the Thai Household Socioeconomic Surveys (SESs) from 1992 to 2011, this paper estimates the intensity of the precautionary saving motive, measured by the coefficient of relative prudence of households in Thailand. By using a dynamic pseudo-panel approach to address concerns with regard to individual heterogeneity causing bias in estimation, the estimated relative prudence of Thai households is around 2, which shows a low precautionary saving motive among these households compared to other countries. Estimates based on disaggregation by demographic characteristics show that as a result of the government-assistance policy, older cohorts and those who live in the rural areas show lower prudence.