Marginal Propensity to Save (MPS)


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Formula: MPS = ΔSavings / ΔIncome

The Marginal Propensity to Save (MPS) is a metric that represents the portion of additional income that a household saves rather than uses for consumption. In this formula, MPS is the marginal propensity to save, ΔSavings is the change in the amount of savings, and ΔIncome is the change in income. The MPS can vary between 0 and 1, where 0 indicates that any additional income is spent, and 1 suggests that all additional income is saved. The MPS is the counterpart of the Marginal Propensity to Consume (MPC), as MPS + MPC = 1.

Tags: Economics, Financial Planning, Savings, MPS