Some economists believe negative interest rates can have unintended psychological effects, encouraging people to save instead of spending more. This WSJ article says negative interest rates can instill fear, and this pushes households to hoard even more. People only spend, the writer suggests, when they are confident about their future.
Saving more illusion
Spending more just to save more is self-defeating says this New York Times article. But even the most money-savvy may try to justify acts like going to the store to buy milk and coming home with a bicycle “because it was on sale”. Instead, uncouple and separate buying and saving decisions.
Late life anxiety
Reducing later-life anxiety is important for an ageing population and this Japanese study finds that financial literacy can play a key role. Other factors such as socioeconomic background, household assets, home ownership, and living with children all help but higher financial literacy levels can prepare people mentally to accumulate wealth.