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The Google search that Dean refers to actually seems to have about as many papers which discount the housing-wealth effect as affirm it. The influences on savings and spending rates is a complex and controversial subject and I don't think the dogmatism that Dean applies to it - attributing the level of savings to wealth effects only - is justified. Stock-market wealth was not always correlated with savings rate. There was a peak of stock-market wealth in the 60's which had no effect on savings rate: http://www.skeptometrics.org/SavingsDJIA.png There was also a huge housing boom with corresponding increase in housing wealth after WW II up to around 1970 and this seems to have had no effect on savings rate, which just increased steadily until around 1980. Presumably the extremely high savings rate during WW II resulted in wealth in savings bonds - where is the effect of this factored in? Psychologically, wealth effects seem dubious. I doubt if very many homeowners, apart from those few who are actively speculating, keep close track on their equity and adjust their spending accordingly. People who actively speculate in the stock market may adjust spending according to perceived wealth, but such people are a small fraction of the population. As shown in the graph, revolving or credit-card debt has increased as savings rate has gone down - credit cards hardly existed before the 60's. It is also hard to believe that the decrease in real wages in the lower part of the income spectrum since about 1970 has not affected savings rates for most consumers. Have these and other influences really been ruled out conclusively, or is the emphasis on wealth effects just faddism and oversimplification? Probably many things are correlated with overall societal optimism, but it is difficult to put a number on this. Dean is right to call attention to asset bubbles, but they don't explain everything. - skeptonomist