Psychological Approaches to the Study of Saving

Abstract

should, in principle, be possible to investigate the influence of these subjective variables on saving, in the same way as the influence of the "objective" rate of interest on saving can be studied. A similar study could presumably be made of the effects of variations in perceived "disutility of postponed consumption." J. M. Keynes Keynes introduced new ideas concerning the determinants of saving. One of his changes in the classical theory is the assumption that the behavior of the consumer unit is not to any great extent influenced by changes in interest rates within an economically plausible field of variation. Furthermore, the value of saving per se is stressed to a considerably greater extent. The idea that saving is motivated only by the explicit planning of future (postponed) consumption is replaced by a whole series of possible reasons for the "utility" of saving. 3 The most important feature of Keynes's theory of consumer behavior 2 This description of classical economic theories is, of course, extremely abridged and simplified. See Gardner Ackley [1] and D. B. Suits [266] for a more detailed summary of the basic ideas in the theories. Werner Paschke has presented [220] an extensive review of the various saving motives and mechanisms postulated by economic thinkers from Xenophon to the present. 3 This list of reasons as to why saving may be attractive has frequently been criticized as arbitrary and based on introspection. See R. Schroder [244]. Ways of Describing the Individual Saving Process 5 is, however, the thesis that the extent of saving, at least in the short run, is more or less completely determined by the size of real income. This idea has given rise to a multitude of empirical studies aimed at investigating the correctness of the thesis (Robert Ferber [63]). Keynes's hypothesis about the way in which income is related to consumption and saving is expressed primarily in the "fundamental psychological law" which he postulated. hardly described the model which underlies his work explicitly and in detail. The following description which must, therefore, be regarded as 6 Psychological Approaches to the Study of Saving somewhat tentative is based primarily on Katona's book, The Powerful Consumer ([119], especially Ch. 4), and on F. M. Nicosia's interpretation [210] of Katona's model. Consumer behavior, according to Katona, is a function of economic stimuli of different types and of intervening variables within the individual, '