Saving Behaviour and Biomarkers: A High-Dimensional Bayesian Analysis of British Panel Data

Sarah Brown, Pulak Ghosh, Daniel Gray, Bhuvanesh Pareek and Jennifer Roberts

Abstract

Using British panel data, we explore the relationship between saving behaviour and health, as measured by an extensive range of biomarkers, which are rarely available in large nationally representative surveys. The effects of these objective measures of health are compared with commonly used self-assessed health measures. We develop a semi-continuous high-dimensional Bayesian modelling approach, which allows different data-generating processes for the decision to save and the amount saved. We find that composite biomarker measures of health, as well as individual biomarkers, are significant determinants of saving. Our results suggest that objective biomarker measures of health have differential impacts on saving behaviour compared to self- reported health measures, suggesting that objective health measures can further our understanding of the effect of health on financial behaviours.