Heterogeneous savers and their inflation expectation during German industrialization: Social class, wealth, and gender

Sibylle H. Lehmann-Hasemeyer, Andreas Neumayer and Jochen Streb

No 33, Working Papers from German Research Foundation's Priority Programme 1859 "Experience and Expectation. Historical Foundations of Economic Behaviour", Humboldt University Berlin

Abstract: Using microeconomic data on 2,500 savers of the savings bank Ludwigsburg, we study individual savings behavior in 19th century-Germany. We show that wealthy savers responded to an increase in the expected inflation rate (and falling real interest rate) by increasing their savings, suggesting that they pursued a real saving target that could only be defended by saving more when investment conditions became adverse. Workers' savings behavior changed over time. For a long time, poorer, often female, working-class savers were forced to reduce their savings in times of high prices because they had to spend most of their income on essential consumer goods. This changed in the 1880s, when the living conditions of the working class improved significantly due to rising real wages and greater social security. We therefore observe a structural break in the savings regime: the originally negative relationship between inflation expectations and savings was reversed into a positive one. Looking only at the aggregate may obscure the true motives and changes in behavior of heterogeneous savers.

Keywords: expectations; inflation; industrialization; inequality; heterogeneous savers (search for similar items in EconPapers)
JEL-codes: D15 E21 N33 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ban, nep-fdg, nep-his and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:pp1859:33

DOI: 10.18452/24406

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