Subjective factors are related with the Psychology of the people, mental trends and the social and cultural behavior of the society. Keynes believes that subjective factors do not change in the short run. Subjective factors can be divided into two (a) Psychological characteristics of human nature (b) Social practices and institutions.

Psychological Characteristics of Human Nature
Keynes says that Psychological characteristics of human nature do not change in the short run and hence the consumption function is not influenced. Following are the eight Psychological motives due to which people refrain from consumption and tend to save.

Precautionary Motive
This leads to more saving and hence as a result the consumption function would shift downwards.

Motive of Foresight
People tend to save now to meet future expenses such as education of their children and their children’s marriages hence, if this occurs the consumption function would shift downwards.

Motive of Calculations
Calculation are made, about future income and, keeping in view the rate of profitability, more saving and less consumption would occur.

Motive of Improvement
In order to improve the standard of living in the future, people would take steps such as saving more now and consume less.

Motive of Independence
With the intention of becoming economically; independent for future purposes some people would cut down their current consumption level of save more.

Motive of Enterprise
Some people have the intention of investing in various/different kinds business enterprises. As a result they would save continuously from their current income.

Motive of Pride
To some people it is a matter of pride that they save a large amount of money, to be inherited by their families.

Motive of Avarice
Some people refrain from consumption due to pure miserly temperatures built in them by nature.

Following are six, psychological motive due to which people consume and refrain from saving.

Motive of Enjoyment
Many times people are drawn to consume more for the benefit of social environment and other means of enjoyment and hence do not pay much attention to saving.

Motive of Short Sightedness
Some people do not care for the future prospects of saving now and hence they consume whatever they can.

Motive of Generosity
Some people are temperamentally generous and as a result they consume more and save less.

Motive of Ostentation
More often people tend to neglect or even miscalculate their future income and hence do not have a programme of saving.

Motive of Extravagance
Some people are extravagant and tend to consume more.

(B) Social Practices an Institutions

Social practices of the people and institutional behaviour towards saving do not change in the short run and hence they continue with their saving pattern and do not influence their consumption function. Business institutions save due to the following motives.

Motive of Enterprise

Institutions tend to save so as to establish business enterprises or expand them. In this way they would not have to borrow money from various sources for their investment purposes as they would have to pay a certain amount of interest which would add up to an increase in the cost of production.

Motive of Liquidity
Institutions also save for the purpose that they may always have liquid assets at their disposal in order to bear the uncertainties of the business future and to over come any financial depression.

Motive of Income
Institutions save so that they may increase their investment which would result in an increase in their income level.

Motive of Financial Prudence
Business institutions save in order to pay their debts and also to meet the expenses incurred as a result of the wear and tear of their machinery.

Conclusion of Psychological Law of Consumption

According to Keynes subjective and objective factors discussed above can influence the consumption function i.e. they can change the shape and position of the curve and they can also shift it upward or downward. Since, these factors do not change in the short run; the consumption function is stable at its position. Thus, consumption is only a function of income. This means that with an increase in income, consumption level also rises, however, the level of increase in consumption is less than the level of increase in income and the same is true for a decrease. This leads us to a conclusion that income and employment in a country can be raised only by increasing the levels of saving and investment.