permanent income hypothesis

permanent income hypothesis definition - business

permanent income hypothesis

The economic theory that individuals and families base consumption expenditures on their normal, or permanent, income rather than current income. According to this theory, variations in income, for example, a Christmas bonus, have little impact on consumer spending.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

Comments
Improve this definition.
Do you have more to add? Share your linguistic knowledge or observation.
/Register to save your comments.