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Thin Wallets and Fat Bodies

Average Americans want to save 10% of their income and claim to save about 3%. If only that were true. We set a record low in February 2000, with a 0.8% savings rate. In other words, if you took home $2,000 after taxes and you saved like an average American, you spent every cent except a measly sixteen bucks.

The result is that Americans have little or no cash to spare. Enticed to spend by urgings everywhere we turn - from the Internet to billboards to crafty product placements on TV and in movies - we are a nation of spenders, rushing to deposit paychecks into minuscule bank accounts to cover the checks we have written.

To understand our spending behavior, let's visit some of the world's most accomplished savers by taking a trip to northern Europe. There we find forests where autumn arrives much as it does throughout the temperate parts of the world. Leaves change their color, temperatures plummet, and winds pick up.

Look down as you walk through the forest and you'll see a feverish acknowledgment of the oncoming winter. Red squirrels shift into overdrive each September, forsaking their summer life of leisure. In the course of twomonths, each squirrel will hide more than three thousand acorns, pinecones, and beechnuts throughout the several acres of their home range. It's hard being a squirrel.

Come winter, however, diligence pays off. With little food to be found on the bare trees, some squirrels are still living large. Each day they methodically move from one storage spot to the next as they ultimately recover more than 80% of their stashed snacks, enough to keep them alive until spring.

Hoarding for the future isn't restricted to rodents with big cheeks. It's a common response throughout the animal kingdom when lean times are ahead. Many bird species also store food in the fall. Nutcrackers, for example, bury seeds from pine trees and, like squirrels, show remarkable memory in finding their savings.

If there were a Savings Hall of Fame, it would contain dozens of animal species but certainly not the average American. How can humans (at least most Americans) be so much worse at preparing for lean times than squirrels, birds, and an ark full of other dim-witted creatures?

As described in the fable of the grasshopper and the ant, there are two strategies for dealing with abundance. The grasshopper plays all summer long while the ant works relentlessly to store food. When winter comes, the ant survives and the grasshopper dies.

Similarly, squirrels that work hard to store nuts survive the winter to have babies in the spring. When those babies grow up, they have the genes of their parents, genes that tell them to start burying nuts when fall comes. Animals are accomplished savers because natural selection favors the appropriately thrifty. Shouldn't the same forces have produced frugal humans? To understand the answer, we can learn by observing the behavior of people who live as foragers, as our ancestors did until recently.

The !Kung San live in the deserts of southern Africa. Until the 1960s they lived off this harsh land as nomads, gathering plants and hunting animals much as their ancestors had for ten thousand years or more. Because some San were still hunting and gathering into the 1960s, we have detailed records of their behavior in circumstances similar to those of our ancestors.

The !Kung San perpetually faced uncertain supplies of water and food. Building up reserves for the future would certainly help buffer those risks. Did the !Kung San save? Absolutely. The best opportunity for this saving came in times of windfall, usually after the killing of a large animal like a giraffe. With hundreds of pounds of edible giraffe meat, a hunter with a good savings system could live for months...