Who explain the relative income hypothesis

Neumark and postlewaite (1998)propose a model of relative income to rationalize the striking rise in the employment of married women in the usa during the past century.The hypothesis, which states that individual utility depends both on own income and income relative to others, did not attract a lot of empirical attention until two separate later developments.The permanent income hypothesis (pih) is a model in the field of economics to explain the formation of consumption patterns.it suggests consumption patterns are formed from future expectations and consumption smoothing.The theory was developed by milton friedman and published in his a theory of consumption function, published in 1957 and subsequently formalized by robert hall in a rational.Now income falls to oy 0.Explain two main aspects relative income hypothesis.

Introduction and background the relative income (ri) hypothesis was proposed to explain savings behaviour in the us (duesenberry, 1949).Duesenberry argued that consumers view their own social position and status in relation to others, and then behave accordingly.In economics, relative income hypothesis is attributed to james duesenberry, who investigated the implications of this idea for consumption behavior in his 1949 book titled income, saving and the theory of consumer behavior.The re lative income (ri) hypothe sis was proposed to explain savings behaviour in the us.However, according to keynes, of all the factors it is the current […]