Relative Income Hypothesis

Relative Income Hypothesis

Relative income hypothesis states that the saving decision or saving function or saving ratio is independent to an absolute level of income rather it depends upon the relative portion of the individual in the income distribution of society and previous peak level of income.

Meaning

Assumptions

Mathematical Derivation

Reconciliation of Short-run and Long-run consumption function

Figurative analysis

Our articles on Economics

Permanent Income Hypothesis

Life Cycle Hypothesis: Macroeconomics

Absolute Income Hypothesis: Macroeconomics

Other online resources

Relative_Income_Hypotheses | Wikipedia

Suggested Readings:

Vaish. MC. (2010). Macroeconomic Theory. (14th Ed.). New Delhi: Vikas Publishing House Pvt. Ltd.