Abstract: Using the data from the China Household Finance Survey in 2011, this paper studies the effects of happiness on residents′ savings behavior and intrinsic mechanism from the perspective of emotional factors. The empirical results show that happiness has a significantly negative effect on savings behavior and savings rate; using happiness of city as instrumental variable of residents′ happiness, we also find the results are robust by the 2SLS method. Moreover, the association between happiness and residents′ savings behavior is driven by optimism of future economy and interest rate, rather than uncertainty and bequest savings motivation. The policy implication of this paper is that the problem of China′s high savings rate can be alleviated to some extent by enhancing residents′ happiness.

Key words: happiness, savings rate, optimistic expectation;uncertainty, bequest savings motivation