A Theory Of The Consumption Function by Milton Friedman

What is the exact nature of the consumption function? Can this term be defined so that it will be consistent with empirical evidence and a valid instrument in the hands of future economic researchers and policy makers? In this volume a distinguished American economist presents a new theory of the consumption function, tests it against extensive statistical J material and suggests some of its significant implications. Central to the new theory is its sharp distinction between two concepts of income, measured income, or that which is recorded for a particular period, and permanent income, a longer-period concept in terms of which consumers decide how much to spend and how much to save. Milton Friedman suggests that the total amount spent on consumption is on the average the same fraction of permanent income, regardless of the size of permanent income. The magnitude of the fraction depends on variables such as interest rate, degree of uncertainty relating to occupation, ratio of wealth to income, family size, and so on. The hypothesis is shown to be consistent with budget studies and time series data, and some of its far-reaching implications are explored in the final chapter. "...the most influential economist of the second half of the 20th century...possibly of all of it.”—The Economist "Friedman argued that the best way to make sense of saving and spending was not, as Keynes had done, to resort to loose psychological theorizing, but rather to think of individuals as making rational plans about how to spend their wealth over their lifetimes...The details are a bit technical, but Friedman’s ‘permanent income hypothesis’ and the Ando-Modigliani ‘life cycle model’ resolved several apparent paradoxes about the relationship between income and spending, and remain the foundations of how economists think about spending and saving to this day."—Paul Krugman, New York Times

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The 402nd greatest nonfiction book of all time


This book is on the following lists:

  1. - The New York Public Library's Books of the Century (New York Public Library)

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Name Binding Sales Rank Lowest New Lowest Used Published
Theory of the Consumption Function (National Bureau of Economic Research) by Milton Friedman (2008-08-17) Paperback 4013064 $39.06 $11.37
A Theory of the Consumption Function (National Bureau of Economic Research Publications) Hardcover 2464678 $48.09 1957
Theory of the Consumption Function (National Bureau of Economic Research) Paperback 3936191 $35.00 $7.00 2008
A Theory Of The Consumption Function Kindle Edition 895307 2016
A Theory of the Consumption Function by Milton Friedman (2015-04-28) Paperback 7741907 $13.27 $16.63
A Theory of the Consumption Function Hardcover 11790643 $13.47
A Theory Of The Consumption Function Hardcover 784799 $47.95 $42.99 2011
A Theory of the Consumption Function Paperback 224549 $10.73 $9.66 2015