Year: 1971
Type: article
Abstract: Psychological Approaches to the Study of Saving diction that the degree of saving will be extremely sensitive to interest rates (especially since the discussion often concerns situations with stable prices) ?Applying the classical model to the description of individual consumer behavior thus presupposes that the consumer is, as a minimum, informed of the current rate of interest and is able to assess the amount of consump- tion which saving can give rise to in the future, as well as to form an impression of the degree of disutility involved in postponing various amounts of potential immediate consumption.The economic theories as- sumed, of course, that the individual made the assessments of interest and of costs for future consumption (interest gains included) in a veridical fashion.The disutility of refraining from immediate consumption must, however, necessarily have been regarded as a subjective experience, vary- ing between individuals (although probably constant over time and mar- ginally decreasing with the level of current consumption) It is, however, worth noting that the model may be useful and have some explanatory value at the individual level, even if the public's knowl- edge of interest rates and costs for future consumption in no way agrees with the "true" values computed by economists.By measuring different people's subjective notions of the interest rate and costs for future con- sumption or by means of experimental manipulation of these notions, it should, in principle, be possible to investigate the influence of these sub- jective variables on saving, in the same way as the influence of the "objec- tive" rate of interest on saving can be studied.A similar study could pre- sumably 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].
DOI: 10.2307/133798
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1981505876