Average propensity to save

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In Keynesian economics, the average propensity to save (APS), also known as the savings ratio, is the proportion of income which is saved, usually expressed for household savings as a fraction of total household disposable income (taxed income).

${\displaystyle APS={\frac {S}{Y}}}$

The ratio differs considerably over time and between countries. The savings ratio for an entire economy can be affected by (for example) the proportion of older people (as they have less motivation and capability to save), and the rate of inflation (as expectations of rising prices can encourage people to spend now rather than later) or current interest rates. APS can express the social preference for investing in the future over consuming in the present. The complement (1 minus the APS) is the average propensity to consume (APC).

Low average propensity to save might be the indicator of a large percentage of old people or high percentage of irresponsible young people in the population. With income level changes, APS becomes an inexact tool for measuring these changes. So, the marginal propensity to save is used in these cases.