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March 2005
Vol. 6, no. 3

Perspectives on Labour and Income

Spenders and savers
Raj K. Chawla and Ted Wannell

  • Canadians are spending more and saving less than they did in the past. Much of the spending is financed by borrowing, either through mortgages or consumer debt. From 1982 to 2001, the debt-to-income ratio rose from 55% to 97%. On a constant-dollar basis, per-capita debt doubled from $10,300 to $20,900.
  • As aggregate debt soared, the number of households out-spending their income in the course of a year also increased. In 1982, 39% of households spent more than their pre-tax income. By 2001, the proportion had reached 47%.
  • Savers (those who spend less than their pre-tax income) earned substantially more than spenders and consequently paid more income tax. Personal income taxes amounted to 25% of expenditure for savers in 2001 versus 16% for spenders.
  • After netting out taxes and security payments, spenders consumed more than savers, despite their lower earnings. Spenders out-consumed savers by 15% in 1982 and 10% in 2001. The narrowing consumption gap reflects slower income growth among spending households.
  • Even though the proportion of savers consistently rose with income in both 1982 and 2001, the proportion of spenders increased in all income classes between the two years.
  • The proportion of spenders increased in all age groups, but particularly among households in the pre-retirement years. Significant increases were also noted among households with education spending, families with children at home, and homeowners with mortgages.
  • Spenders out-purchased savers in most categories of goods and services, but car purchases were mostly responsible for pushing spenders into the red. In 2001, for example, spenders put out an average of $15,200 for cars compared with $9,000 for savers.

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Raj Chawla and Ted Wannell are with the Labour and Household Surveys Analysis Division. Raj Chawla can be reached at (613) 951-6901, Ted Wannell at (613) 951-3546 or both at

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