Building Quote by Robert Skidelsky, Baron Skidelsky
“The psychology of the saver and the psychology of the investor is very closely connected with Keynes' distinction between risk and uncertainty. When the future is uncertain, he thought that a lot of saving would be directed towards securing, securing more, getting more security in the present, rather than building wealth in the future, which was the classical view, you save in order to invest, in order to consume more later on. What he had called the propensity to hoard or liquidity preference would normally be stronger than the inducement to invest.”
About This Quote
Source Book: Keynesian Economics, John Maynard Keynes, 1936
Keynes linked saving behavior to risk aversion, suggesting people hoard liquidity when future outcomes are uncertain, limiting investment.
In simple terms: Uncertainty makes people save more, invest less.
Key Takeaway
Recognize when fear of uncertainty drives hoarding.
Themes
economics
behavioral finance
risk
uncertainty
investment
Mood
cautious
analytical
reflective
Type
analytical
philosophical
When to use this quote
- Personal budgeting
- corporate finance
- policy making
- financial planning
- investment strategy
Key Concepts
Liquidity preference
propensity to hoard
risk aversion
Questions to Reflect On
- How does your risk tolerance affect your saving vs. investing decisions?
- What strategies can reduce uncertainty to encourage investment?
A Different Perspective
If uncertainty is high, excessive saving can stall growth.
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