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Keynes's investment theory as a micro-foundation for his grandchildren

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  • Nisticò, Sergio

Abstract

In contrast with the "missing micro-foundations" argument against Keynes's macroeconomics, the paper argues that it is the present state of microeconomics that needs more solid "Keynesian foundations". It is in particular Keynes's understanding of investors' behaviour that can be fruitfully extended to consumption theory, in a context in which consumers are considered as entrepreneurs, buying goods and services to engage in time-consuming activities. The paper emphasizes that the outcome in terms of enjoyment is particularly uncertain for those innovative and path-breaking activities, which Keynes discussed in his 1930 prophetic essay about us, the grandchildren of his contemporaries. Moreover, the Keynes-inspired microeconomics suggested in the paper provides an explanation of why Keynes's prophecy about his grandchildren possibly expanding leisure did not materialize yet. The paper finally points at the need for appropriate economic policies supporting consumers' propensity to enforce innovative forms of time use.

Suggested Citation

  • Nisticò, Sergio, 2020. "Keynes's investment theory as a micro-foundation for his grandchildren," Economics Discussion Papers 2020-6, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwedp:20206
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    References listed on IDEAS

    as
    1. Sergio Nisticò, 2014. "Production of (Pleasant) Time by Means of (Unpleasant) Time: Some Notes on Consumption Theory and Time Use," Metroeconomica, Wiley Blackwell, vol. 65(2), pages 276-297, May.
    2. A. K. Cairncross, 1958. "Economic Schizophrenia," Scottish Journal of Political Economy, Scottish Economic Society, vol. 5(1), pages 15-21, February.
    3. Nisticò, Sergio, 2015. "Enjoyment takes time: Some implications for choice theory," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-40.
    4. Lachmann, Ludwig M, 1976. "From Mises to Shackle: An Essay on Austrian Economics and the Kaleidic Society," Journal of Economic Literature, American Economic Association, vol. 14(1), pages 54-62, March.
    5. Easterlin, Richard A., 1974. "Does Economic Growth Improve the Human Lot? Some Empirical Evidence," MPRA Paper 111773, University Library of Munich, Germany.
    6. Marina Bianchi & Eleonora Sanfilippo, 2015. "Social Interdependencies in Consumption: An Early Economic Debate on Social Distinction, Emulation, and Fashion," History of Political Economy, Duke University Press, vol. 47(4), pages 547-575, December.
    7. Antonio Bariletti & Eleonora Sanfilippo, 2017. "At the origin of the notion of ?creative? goods in economics: Scitovsky and Hawtrey," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2017(1), pages 5-34.
    8. Scitovsky, Tibor, 1992. "The Joyless Economy: The Psychology of Human Satisfaction," OUP Catalogue, Oxford University Press, number 9780195073478.
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    More about this item

    Keywords

    Keynesian microeconomics; consumption; time use; uncertainty; Keynes's grandchildren;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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