Savings and Risk Aversion: Behavioral Evidence from Spain, the Netherlands, and Sweden

This paper investigates the behavioral determinants of household savings behavior across Spain, the Netherlands, and Sweden over the period 2000–2025. Using a combination of hierarchical Bayesian estimation, mixed logit models, and panel data techniques, the study examines how risk aversion, precautionary motives, financial literacy, income shocks, and uncertainty shape savings decisions. The results show that precautionary motives are the dominant driver of savings behavior, exceeding the influence of income effects, while financial literacy significantly increases savings and reduces risk aversion. Substantial cross-country heterogeneity is identified, with Spain exhibiting the highest risk aversion and strongest sensitivity to income shocks, while Sweden shows comparatively lower risk aversion and higher responsiveness to financial literacy. The findings also reveal strong behavioral persistence in savings behavior and significant heterogeneity across age and housing tenure groups. Overall, the evidence highlights that household savings decisions are driven by a combination of structural preferences, behavioral constraints, and institutional environments rather than income alone. The study contributes to behavioral economics and household finance by integrating risk preferences, cognitive constraints, and uncertainty into a unified empirical framework with cross-country evidence. JEL Classification: D12, D14, D81, D91, E21, G11.