Re: [PEN-L] query: class consumption function

[Eugene Coyle]

Consumption and habituation? I'm reading Richard Layard on "Happiness."  He talks about two sources of people spending more and not being happier for it.  One is habituation -- and I think this is part of what I got from Marglin.  Layard says of habituation "As I ratchet up my standards, this reduces the enjoyment I get from any given standard of living." (Still haven't gone back to Marglin, but thanks to both of you for the cites.  I'll get there.)  As I recall Marglin, he used the example of grad students living happily on almost no income, and then later being unable to live that way again.   The second of Layard's mechanism is rivalry.   "If others get better off, I need more in order to feel as good as before.  So we have two mechanisms which help to explain why all our efforts to become richer are so largely self-defeating in terms of the overall happiness of society." Death to the permanent income hypothesis.  That one never made sense to me. Gene Coyle Jim Devine wrote: And then, thanks to Jim, for getting to the part of Marglin I was thinking about -- the consumption function stuff. I'd had a mimeo of the Marglin and didn't remember that it was in two parts. So thanks, Jim. And now if I can just find that, .... Stephen Marglin, "What Do Bosses Do? Part II" _Review of Radical Political Economics_ v7, n1 (Spr. 1975): 20-37 But the "undertow" stuff is interesting. for more on the "underconsumption undertow", see http://myweb.lmu.edu/jdevine/talks/newOhio.htm