I Fiance Apicultural

111
nient), and lastly, the inverse of lagged current income (Table 50). This
study also shows that the marginal propensity to save with respect to
expected family income increases by 33 percent when the expected rate
of return is included.
In Ong's 1972 study of Taiwan, the expected rate of return variable,
among others, is included, and expected income is the most important
variable (Table 51). In the Republic of Korea (1-lyun, Adams, and [-lshak
1979), pernanent income is the most important variable, while transitory
income is the least important (Table 52). Even this study shows that the
marginal propensity to save is sensitive to the exclusion of the expected
rate of return to capital ,san explanatory variable. Among other variables
that are more important than incentives to save are interaction of pemlanent
income with (1) the dependency ratio in the family, (2) the value of
liquid asscis, and (3) cultivated land. But, when rural saving is defined per
household inmtead of per capita, then interaction of peritanent income
with th e At retunli to capital is the second most important factor. In
Gupta's (19701)) study on rural household saving in India, transitory
income is the n ost important variable, followed by riilaen
t
and
income,
then tle treal rate of interest oh treasti-y bills (Table 50). Among the
remain ing six studies oil ecot lotl ly-widc saving,
i the mlajority show that
incentive to save is the least important variable. 'Tiis is also the- case with
gross national saving ill the Republic of Korea. lit tie United States,
incentives to save are broadly more significant thtan some of the measures
of ability to save, though the latter, with its tItore direct measurement, is
more important than the real rate of rett!!n to capital (Boskin 1978) (Table
53). In conclusion, in all the cottrics under reference, ability to save is
more important than incentives to save.
Response of Rural Saving
to the Interest Rate
As mentioned earlier in the context of total saving, the interest
deposits
rate on
is a proxy for the rate of rcturn to capital because of the
difficulty of measuring the true detertinant. Despite this difficulty,
determinant
this
has been studied in three papers on rural saving (B.M.
Desai 1975; l-Iyin, Adams, and 1-Hushak 1979; and Ong 1972) and one
ott economy-wide private-sector saving (Boskin 1978). Irrespective of the
nature of thte measurement of the variable ott incentive to save, it is not
possible to guess whether its impact on saving will be positive
(B.
or negative
M. Desai 1983b; Miksell and Zinscr 1973; Snyder 197,1). Nor can the
magnitude of its elasticity he hypothesized because, wletn the variable
for incentive to Save improves, two types of'effects result: ou is a pure
substitution effect aitd the other is all incotC effect. TIhe substitution
effect is always positive because savers wil substitute ftture consuttliption
for )resent consunnptionl, and consequently they will save
when
more
the expected rate of rethrn increases. The income effect is indeterminate,
as'shown in B. M. I)esai 19831). It can be negative or positive.
When the present value of net income increases after a rise in
interest
the
rate or the rate of return, savers will decrease saving and