Does artificial intelligence improve or reduce the level of regional savings? Evidence from China

Artificial intelligence(AI) is causing concern among many who fear becoming increasingly redundant, prompting them to save more as a precaution. This paper conducts a qualitative analysis based on theories such as precautionary saving motives. Subsequently, employing a city and year two-way fixed effects model, a qualitative analysis was conducted using data from Chinese cities from 2008 to 2020. The results show, first, that there is an 'inverted U' nonlinear relationship between AI and regional savings levels. Second, AI promotes the development of the digital economy, which in turn exhibits an 'inverted U' nonlinear relationship with regional savings levels. Third, the impact of AI on regional savings levels is heterogeneous: in first-tier cities, the critical inflection point of AI development occurs at a lower level. This study provides new evidence on the economic impact of AI and serves as a reference for government departments to formulate policies that promote economic development. JEL: O33, E21, R11