Part of the answer is that the Japanese standard of living is lower than the American level. With high food prices, you buy relatively less food -- 110 grams of meat per person (1/4 lb) wouldn't be odd in the US, indeed 200 grams wouldn't be odd, but it would be in Tokyo. With high housing prices, you buy less housing. So you can save.

One distinction is "spending to income" behavior, where the entire paycheck is spent. That seems to fit 40% of households in the US (off the top of my head).
But with bonuses comprising a large part of income in Japan, you can spend to monthly income and still save a lot if you try not to spend ahead and eat into your bonus.

Finally, historically spending behavior seems to adjust slowly. When incomes rise very quickly, consumption doesn't respond fully and the residual is (by definition) savings.

(Note, too, that there are many technical and conceptual issues with measuring savings, but even after such adjustments Japanese savings remains high and US savings low. And Japan is not the only high-saving country...)
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Michael J. Smitka
Associate Professor of Economics
Washington and Lee University
Lexington, Virginia 24450 USA
(703) 463 - 8625 Tel & Voicemail
(703) 463 - 8639 Fax
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