Published in 2008, one of the worst years for economic declines since the Great Depression, Ronald Wilcox's comprehensive but slim book on the importance of saving is very timely. The volume reads easily and incorporates content relevant to the individual, household, policymaker, and CEO. The author starts by asking whether Americans save too little, a question often asked in popular and research circles. Wilcox's answer is prescriptive-focused: sensible policy is the answer.
Targeted toward those who have the ability to save but do not, Wilcox evaluates why many Americans do not save enough and why they make so many bad decisions. The author proposes that Americans have low levels of financial literacy and therefore tend not to make good financial choices. But because he lacks confidence in individual decision-making, he therefore believes that policymakers must intervene. He proposes increased education yet acknowledges that its impact on saving may be limited. He also recommends that the government increase the personal saving via a consumption tax. Acknowledging that this type of tax may be difficult to get through Congress, Wilcox offers an alternative that pertains to the privatization of Social Security for poor Americans only. In theory, this may be a good alternative, but the recent behavior of the stock market means it is highly unlikely that Congress would agree to privatization of Social Security in the near future. Additionally, through private-sector solutions, Wilcox ascertains that CEOs can help mold employee saving decisions. Nevertheless, many employees do not work in companies which offer saving or retirement plans.
The author asserts that, in combination, economic, psychological, and sociological reasons explain the saving problems plaguing the country. His recommendations merit consideration from Congress and public and private policymakers to revive thrift. Nevertheless, in this writer's view, more effort must be devoted to easy-to-use saving vehicles. Also it is unclear how Wilcox's recommendations will benefit mid- and low-income Americans who are least likely to save.
