Saving motives as an expression of behavioral principle

The dogmatic history shows a complete picture of the building of motives and driving forces of saving which gives an idea of the respective historical situations and modifications in the ideology of the savers with the development of culture in different eras.

PASCHKE (1961:54ff) has presented a list of the changing nature of saving motives over a period of one and a half centuries, as indicated by the renowned scholars of that time.

The historical overview in Table 1 shows a sequence of change in the motive consciousness of societies with changing levels of cultural and economic development.

Major motives are mentioned separately and are divided into ethic and its metaphysically associated factors such as, cultural development respect to social and economic driving forces. Every motive is awarded a valuation according to its historical significance.

Historical observation reveals that saving has always been a complicated process and saving motives have always remained under the influence of general standards in a society.

Ethics have kept losing their significance with respect to society and economy throughout the period, major attention is diverted to economic factors.

Thus, a motive increasingly influenced by religious and ethical teachings remain most of the time no longer logical when exposed to the cultural renaissance of rational, economic and societal development and when experiencing an expansion process. The logic of the new trends affects the behavior of the individual, and the consistency and security of traditionally existent moral code are no longer valid. An everlasting theoretical description or development of an absolute theory of the saving problem is, therefore, impossible.

The motivation of saving is usually based upon the following four principles:5

Saving decision is a reaction of an individual's objectives, a desire of possessions in life;

a saver possesses a variety of driving forces absorbed from all sides, which determine his behavior;

the saving process is an outcome of the economic attitude and the ideology of a person;

socio-cultural development shapes the ideology of the saver which becomes visible in his saving behavior.

5 See also PASCHKE (1961:55).

Table 1. Historical overview of the saving motives

Scholars Saving motives Major motives

Ethic Society Econom y

Xenophon Capital stock, honor x x

Aristotle household duties, state respect x (x)

Assisi, F. discipline, limitation of luxurious life xx

Calvin success, predestination xx

Hobbes Th. moderation xx

Mandeville, B. vanity x (x)

Justi, J. H. G. prosperity, self-sufficiency x (x)

Quesnay, F. precautions x (x)

Mercier de la precautions in income management x (x)

Turgot, A. R. J. self-denial, carefulness, betterment in status, interest

x (x) (x)

Hume, D. usefulness X (x)

Bentham, J. desires, usefulness (x) (x)

x x (x)

Smith, A. sympathy, blissful happiness, betterment of social standard

x x (x)

Ricardo, D. profit xx

Malthus, Th. R. profit (x) x

Rae, J. intellectual insight, public character (x) x

Mill, J. St. desire of capital, development, profit (x) x

Jevons, W. St. future worries (x) (x)

Hermann. F. B. self interest (x) (x)

Schmoller, G. natural condition, social strata xx

Domela -Nieuwenhuis, A. mental and social development, profit expectation

x Manteuffel, C. moderation, instinct, future worries,

capital increase

xx (x)

Böhm-Bawerk, V interest comparison, psyche (x) x

Wicksell, K. future utility, interest, age, family size, income

(x) xx x

Schumpeter, J. A. interest rate (x) xx

Cassel, G. usefulness, interest, income, future worries, standard of life

(x) (x) xx

Clark, J. B. interest, income, habits, social standard, xx

Marshall, A. love for the family x x

Stackelberg, H. limitation of consumption, betterment in the living standard

(x) Reichenau, Ch. social standard consumption habits,

worries of children, cultural development

x xx

Voigt, F. personality forms, income, standard of life

(x) xx xx

Keynes, J. M. real income, social and institutional framework

(x) xx

Samuelson, P. A. disposable income xx

Smithies, A. standard of life, income distribution x xx

Pigou, A. C. assets, prosperity (x) x

Ackley, G. future prospects

Hamburger, W. (x) xx

Duesenberry, J. S. feeling of insecurity, group belonging, high income, standard of life

(x) x xx

Katona, G. a huge variety of the psychological socio--psychological and economic influences

(x) xx xx

(x) = weak influence x = medium influence xx = strong influence

Source: PASCHKE (1961:54ff)

2.1.2.1 Ethical impulse to save

SMITH’s (1961:29ff) economic theory of human behavior takes sympathy feelings and blissful happiness as important determinants of human dealings in everyday life. The basic principle, in his opinion, is that inner satisfaction determines outer fortune and happiness.

Inner satisfaction comes from the proper management of resources to acquire a better life.

Outer happiness, however, seems to be hidden in the bodily comforts.

SMITH relates these moral basics to the economy. As social beings, human beings carry a mutual responsibility for the society. Every spendthrift member appears as an enemy and every thrifty person as a well-wisher of the fellow members of the society. This idea actually represents the cultural - ethical basics of SMITH's economy. This is the leading thought in all of his works. BENTHAM (1823:1, 49f) goes back to the discussion of human dealings and says that the individual psyche is naturally oriented towards easiness, avoiding torture and agony. Individuals collect comforts in order to satisfy their psyche, saving can be considered as a secure way leading to this goal. According to WEBER (1950:166-174), the distinctive sets of dominant sentiments emerge out of one’s belief system. This belief system of an individual restricts some ways which are actually desired by human nature. Such beliefs usually powerfully act against the spontaneous enjoyment of possessions; it restricts consumption, especially of luxuries and approves only the rational and utilitarian uses which shape the thrifty behavior and generates saving.

BENTHAM's cultural teachings have been taken as a point of departure by JEVONS (1924:30f) who views that anticipation of feelings has a significant effect on the economic transactions of an individual, e.g., in most of the cases education level or race determines the horizon of one's foresight. A strong feeling of future security can be taken as a strongest incentive for hard work and careful spending. He considers the ‘expectations’

especially responsible for the act of saving.

2.1.2.2 Economic impulse to save

The economic process has a significant influence on the whole cultural and political process of life. Changing economic conditions always brings new problems in almost every aspect of life. Economic behavior and its related saving behavior are mostly determined by pure economic criteria. Profit, interest and income are three central saving motives whose fluctuations influence the economic behavior of the individuals in pure economic science.

BÖHM-BAWERK (1921:136ff, 362) considers saving to be a result of the comparison of benefit of the current goods with future goods. Saving is also termed a "psychic process" in his work, which is an emotional dealing and mostly a tiring process realized only after long thoughts and fights against many factors. CASSEL (1932:214-218 ) includes profit interest and income as important determining factors but considers

‘future provisions’ as major motives in his investigations. The point of departure in his analysis is the worry that future provisions should not be worse than the present. Saving stabilizes the better future provisions for a long period of time and helps to keep the same standard of life constant in future as well. According to him, upper classes save more than lower ones. Therefore, an important saving impulse can be seen in the way of income differentiation. Individuals become more incited to save with the increase of income. The

greater the income differentiation among different strata of the society, the more the upper classes struggle to maintain this differentiation.

Within the context of interest rate as a motive to save, CASSEL (1932:217) observes that the effect of interest fluctuation is very low at a low level of its fluctuation range. A small amount of income can hardly create considerable capital. The greater the profit on capital is, the greater will be the drive towards it. The desire to save declines accordingly with the decrease in profit.

With respect to profit, MILL (1873:31f) is strongly influenced by RAE's ideas (1905:65ff, 136ff) and views that the public starts thinking about saving when cultural development achieves a certain level of development. The prerequisite for voluntary saving activity is an intellectual ideology which never develops in all sectors of a society at the same time. It only develops after a gradual process when cultural development reaches a certain level.

HAHN (1930:153.) proves the importance of credit in the mobilization of household savings in his work, "Economic Theory of Bank Credit.“ He considers capital formation not as being a result of saving but of credit distribution. Credit expansion leads to higher saving deposits, which determine the purchase power of a household. Credit brings a change in the distribution and movement of prosperity in a saver’s life, which is a strong prerequisite for voluntary saving. But he does not overlook the consequences of such a saving process for the structure of assets.

2.1.2.3 Cultural impulse to save

Most of the economic factors function in relation to cultural factors. Cultural stratification is, for example, linked with economic strata and may also act as an impulse to save (ROSCHER 1906:683). Middle and lower classes have to save more to compete with the upper strata.

MANTEUFFEL (1900) distinguishes the saving motives from saving conditions. To him, economic behavior and an expectation of profit count as saving motives, while the inborn instinct to save, upbringing and training to save from childhood constitute the saving conditions. In other words, motives represent the inner driving forces, while conditions represent the outer ones. MARSHALL (1905:259) also holds similar views and see love in and affiliation with the family as a major inner drive which arouses a sense of development, as the expectation and progressiveness to come forward in life to ensure a better future to the family. The influence of culture is specially emphasized because he views the sense of saving as developing along with the development of culture. This is the reason why the saving rate is higher in developed countries (MARSHALL 1905:28ff.).

Within the same context, VOIGT (1950:200ff, 219) emphasizes the significance of the forms of personality, which are modified during the development of cultural processes. He stresses that terms of maximum profit, comparison of profit with respect to saving fluctuations, propensity for the amount and respective size of saving cannot be explained on the basis of national economy alone. Saving is not only a function of income; it is determined by components of the personality as well. DOMELA-NIEUWENHUIS (1889) links this saving impulse directly with the mental state of an individual. Saving may itself be a source of extra income which needs, however, rationality in dealings and thoughts. Saving means a surplus of production over consumption, which can be achieved in two ways: either by reducing consumption or by increasing production. The

former way is a result of the ‘inner drive’ while the latter is a result of the "outer drive" of saving.

Im Dokument Household savings in rural Pakistan (Seite 28-32)