THE SAVING MYSTERY, OR WHERE DID THE MONEY GO

Of great concern and puzzlement to many has been the decline in the U. S. personal saving rate. From 8 percent of personal income 20 years ag o, saving has fallen to less than 4 percent. This is a matter of conce rn because saving and investment are closely linked, and investment is believed critical to productivity gains and a rising standard of livi ng. The decline in saving is also a source of puzzlement because it ru ns counter to many people's perception of what is happening. This arti cle investigates the decline in saving, focusing on ''where the money went.'' The authors find that rising expenditures on medical services are absorbing a growing fraction of income. Thus, the saving problem i s not about thrift versus profligacy, but rather a competition between more and better medical care, on the one hand, and more investment, o n the other. They point out that efforts to stimulate saving are only one way to increase the economy's productive capacity, and the ultimat e goal is higher standards of living.