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Relative Income Vs. Permanent Income: The Crisis Of The Theory Of The Social Significance Of Consumption

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  • TREZZINI, ATTILIO

Abstract

The investigation of aggregate consumption underwent a radical change in the USA during the 1940s and 1950s. Principles deriving from the American Institutionalist tradition attained their greatest popularity in Duesenberry’s formulation just before they were rapidly abandoned. This paper examines this turning point by comparing Duesenberry’s relative income hypothesis and Friedman’s permanent income hypothesis. This also makes it possible to identify a particular feature of Duesenberry’s analysis—its heterogeneity—which must be taken into consideration by those seeking a return to Institutionalist principles in the analysis of aggregate consumption.

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  • Trezzini, Attilio, 2012. "Relative Income Vs. Permanent Income: The Crisis Of The Theory Of The Social Significance Of Consumption," Journal of the History of Economic Thought, Cambridge University Press, vol. 34(3), pages 355-377, September.
    • Handle: RePEc:cup:jhisec:v:34:y:2012:i:03:p:355-377_00
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    Cited by:

    1. Claudio Cantaro, 2022. "L'approccio classico-keynesiano e la teoria del ruolo sociale del consumo (The classical-Keynesian approach and the Theory of the Social Role of Consumption)," Moneta e Credito, Economia civile, vol. 75(299), pages 285-306.
    2. Daria Pignalosa, 2021. "The Euler Equation Approach: Critical Implications of Recent Developments in the Theory of Intertemporal Choice," Bulletin of Political Economy, Bulletin of Political Economy, vol. 15(1), pages 1-43, June.
    3. Philippy, David, 2021. "Ellen Richards’s Home Economics Movement and the Birth of the Economics of Consumption," OSF Preprints v8yfk, Center for Open Science.
    4. Attilio Trezzini, 2017. "The Social Significance of Consumption and the Elasticity of Output to Demand in the Long Run: A Reply to Gualerzi," Review of Political Economy, Taylor & Francis Journals, vol. 29(1), pages 157-161, January.
    5. Drakopoulos, Stavros A., 2023. "The Economics of Wellbeing and Psychology: An Historical and Methodological Viewpoint," MPRA Paper 117891, University Library of Munich, Germany.

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