Full text: Capital Gains, Pension Funds and

uncritical interpretation of the saving ratio would make it 
The preceding analysis deals only with the financial saving 
of households. It is of interest to find that also the data 
on saving in form of residential housing have been 
subjected to a critical analysis which makes them appear in 
a new light. 
Tibor Scitovsky showed that to a very large extent the 
reduction in the personal saving ratio is due to its being 
calculated net, and to the very high capital consumption 
allowances for dwelling houses which are used in 
calculating it and which increased to an extraordinary 
extent in the late 70s owing to the inflation in housing 
prices(Scitovsky 1986). This kind of reckoning, Scitovsky 
argues, is unrealistic because it does not take account of 
the fact that house owners owing to the considerable 
increase in the value of their property can realise capital 
gains which make it unnecessary for them to provide for 
replacement. If the personal saving is calculated on a 
gross basis,then, as Scitovsky shows, the decline since 
1977 is rather smaller than the decline of the net saving 
ratio given by NIPA. (The gross rate is also better suited 
for international comparisons in most cases). There 
is,however,still a decline,that is, also the gross rate is 
lower than it was in the early 70s. 
Professor Scitovsky's calculation extend only to 1979;I 
have made a very rough calculation for the years 1980 to 
1987 by adding the capital consumption allowance with 
adjustment for owner occupied non-farm houses to the

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