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Definition – What is the average propensity to save?
APS is a ratio of savings to total income. It is the percentage of total income that is put into savings (instead of consumption).
Formula – How to calculate APS
Average Propensity to Save = Savings ÷ Total Income
Example
Savings is $300,000 and total income is $600,000.
APS = $300,000 ÷ $600,000 = 0.500
Therefore, average propensity to save is 0.500.
Sources and more resources
- Wikipedia – Average Propensity to Save – A short description of APS.
- Investopedia – Average Propensity to Save – A longer description of average propensity to save and how it is calculated.