Tag Archive for 'Marginal propensity to consume'


A question for behavioural economists

How true is the old adage “easy come, easy go”?  More formally, is it fair to suggest that an individual’s marginal propensity to consume (MPC) — the share of an extra dollar of income that they would spend on consumption rather than save — depends on the origin of the income?  The traditional wisdom would suggest that:

MPC (fortuitous income) > MPC (hard-earned income)

Have there been any studies on this?  If so, have there been any studies that apply the results to the evolution of US inequality in income and consumption?