MPS Calculator

Created by Tibor Pál, PhD candidate
Reviewed by Dominik Czernia, PhD and Jack Bowater
Based on research by
Krugman, P.; Wells R. Economics, Fifth Edition; 2017
Last updated: Sep 06, 2023

The MPS calculator is a simple tool that allows you to compute the marginal propensity to save, a fraction which is strongly linked to the marginal propensity to consume, average propensity to consume, and the money multiplier. You can check out our MPC calculator, APC calculator and money multiplier calculator.

In the following, you can learn how to calculate MPS by its simple marginal propensity to save formula and get familiar with its importance in economics.

What is the marginal propensity to save (MPS)?

In short, the marginal propensity to save (MPS) is the amount by which household
savings change when disposable income increases by one dollar.

From the concept of MPC, we know that consumers normally spend only a part of an additional dollar of disposable income, that is, the MPC is a number between 0 and 1. The additional disposable income that consumers don't spend is saved. Therefore, the marginal propensity to save (MPS) is the fraction of that additional dollar of disposable income that is saved.

How to calculate MPS? - The marginal propensity to save formula

From the above relations, we can derive the following two marginal propensity to save formulae:

MPS = 1 − MPC

MPC = Δs / Δyd


  • MPS - marginal propensity to save;
  • MPC - marginal propensity to consume;
  • Δs - increase in household savings; and
  • Δyd - increase in disposable income.

Using the MPS calculator, you can compute the marginal propensity to save if you provide the increases in disposable income and household savings.

For example, if you know that an average family saves $300 when its income increase by $1,000, the MPS equals 300/1000 = 0.3.

Since there is a direct relationship between the marginal propensity to consume and the marginal propensity to save, you can deduct the value for MPS from the MPC. For example, if the MPC is 0.6, the MPS equals 1 - 0.6 = 0.4.

Macroeconomic implication of the marginal propensity to save

While savings, in general, are welcomed by a household, the economy as a whole might suffer when a considerable part of the population within the economy increases their savings. We call this phenomenon the paradox of thrift, often referred to as the fallacy of composition. Putting this paradox in our context, when MPS increases in the economy, the MPC must decrease, leading to a lower gross output, which will, in turn, reduce total savings as households then receive less income which could have been saved.

Lately, the paradox of thrift has been related to the debt-deflation theory of economic crisis, proposed as a possible way to explain the economic slump during the Great Recession. In this form, because of high indebtedness, households attempt to repay the loan by increasing savings, referred to as a deleveraging process. When a considerable part of the economy involved in such practice, consumption and investment shrink, unemployment rate increases, and, because of lower aggregate demand, the general price level declines. Because of deflationary pressure, the real interest rate increases, which further increases the real debt burden and triggers more loan repayments. This feedback loop can push the economy into a vicious cycle.

Tibor Pál, PhD candidate
Increase in disposable income
Increase in consumer savings
Check out 35 similar macroeconomics calculators 💵
Buying powerCarry tradeCobb-Douglas production function… 32 more
People also viewed…

Plastic footprint

Find out how much plastic you use throughout the year with this plastic footprint calculator. Rethink your habits, reduce your plastic waste, and make your life a little greener.

Sales tax

Sales tax calculator works out the tax imposed on the sale of goods and services.


Do you always remember to put on sunscreen before going outside? Are you sure that you use enough? The Sunbathing Calculator ☀ will tell you when's the time to go back under an umbrella not to suffer from a sunburn!

Systematic investment plan

Discover the potential of systematic investment plans (SIP) with Omni Calculator. Plan your long-term investments, calculate returns, and achieve your financial goals. Explore the benefits of SIP in the Indian market and make informed investment decisions for a prosperous future.
Copyright by Omni Calculator sp. z o.o.
Privacy, Cookies & Terms of Service