The Anticipation of Expectations – Financial Institutions and the observation of saving behaviour in West Germany and the United States of America

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Savings research often had to deal with different "saving puzzles". This term is used when observed saving behaviour of private households either does not react in the expected manner to changes in macroeconomic data framework or contradicts established economic saving theories. Comparing the savings behaviour of US and German households in the 1970s and 1980s is one of these mysteries: under similar macroeconomic conditions, US households reduced their savings during the 1970s and switched to high-risk financial market products. By contrast, German households saved at a comparatively high level and maintained the classic pass book. The project is based on the assumption that very different expectations of households in the two countries are ultimately responsible for the differences in savings behaviour. In both countries, the 1970s represented a phase of "fundamental learning" (Siegenthaler) in economic history, in which households reformulated their “rule systems” for the formation of economic expectations. This process took place in close interaction with the major financial institutions, who in turn observed the changes in expectations in order to be able to react accordingly with their product portfolio. While the expectations of households and their effect on savings formation cannot ultimately be researched directly due to the lack of micro-data, the interaction process that drove the formation of expectations is well documented in the archives of financial institutions. The project takes advantage of this situation to investigate the formation of savers' expectations and their change during the stagflation period on the basis of observations by financial institutions. The project is based on two comparative case studies in the USA and Germany in the 1970s and 1980s. The first example deals with the different fate of the savings book. The second case study compares the choice of investment forms within state-subsidised savings contracts, some of which are serviced by employers. The project reconstructs the sometimes very complicated regulatory framework for both countries, analyses the savings behaviour and in particular the changes in portfolio decisions, and finally focuses on the communication process between clients and financial institutions, which is documented in a large number of private, state and association archives.