ABSTRACT
In a general sense, saving can be defined as deferred consumption opportunities. Economic agents exchange current consumption opportunities for opportunities in the future. This necessarily involves expectations about the future that are formed not only by individuals but also by households, groups, and larger communities. The nineteenth and twentieth centuries are particularly promising for the empirical study of the relationship between expectations and saving because they include periods of stability, high economic growth, and rising aggregate welfare, yet also periods of great uncertainty, high inflation and deflation, and political and economic crises. However, expectations over longer historical periods are rarely observable, unlike in modern economics where we can observe expectations directly through survey studies. Apart from sources such as diaries and personal correspondence, we have almost no information about the expectations of historical agents and how they arrived at their decisions to consume or save. In economic history, therefore, expectations are inferred from the saving behavior of individuals and households. With this approach, it is possible to inject discussions about long-term planning, fundamental uncertainty, and changing economic circumstances into the economic debate on saving and expectations. Whether and how historical economic agents felt exposed to an uncertain future (for instance, how they expected their lifetime income to keep pace with inflation) will be reflected in their saving decisions. This chapter initially discusses the relationship between expectations and saving from a theoretical perspective, before presenting empirical sources, strategies, and challenges for the analysis of saving behavior in the nineteenth and twentieth centuries. The subsequent sections examine savings and heterogeneous expectations using inflation expectations as a main field of research; the role of financial institutions in expectations and savings; and the influence of state intervention on expectations and savings, with a focus on data and studies on Germany and the USA in the nineteenth and twentieth centuries.
