Talk:Consumption function

Mis-characterization of Keynes; other problems

The article as written states, "Due to the lack of mathematic tools when it was first draft, a very simplistic presentation was created." Apart from being baseless, this claim mischaracterizes of what Keynes was trying to do. Though it is debatable how well he succeeded, Keynes was trying to make simple, forceful arguments to justify his theory of output and income determination via aggregate demand. Keynes may not have been an expert in convexity theory or real analysis, but he certainly had the mathematical tools at his disposal to develop a more complicated representation of aggregate consumption than the one in the General Theory. His not doing so must be assumed to have been his choice. And what is that about "first draft?" Were new mathematical tools suddenly made available after the General Theory was in galleys? Ridiculous. The quoted sentence should be removed or restated to express some awareness of what Keynes' purposes were.

It might also be remarked that an aggregate consumption function and the individual household consumption that results, in relation to income, from specific assumptions about household rationality (quasiconvex utility and the like) are two completely different things. It should not be taken for granted that the consumer sector is a collection of households identical in all respects except for endowments. The text here does not draw this important distiction.

In the first equation, there is no definition of "T." Some people might assume taxes, others might scratch their heads.

Finally the discussion of the quite simple mathematics of Keyne's function introduces needless complexity. Why introduce "affine function?"

Mark Morss (talk) 12:25, 18 July 2014 (UTC)

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BetacommandBot 11:24, 6 July 2007 (UTC)

Where the article says "disposable income" should that read "discretionary income"? BMurray (talk) 03:14, 16 January 2010 (UTC)

written at way, way to high a level

respectfully, I have a PhD in molecular biology, and I sympathize, but this article is written for a 1st year grad student or someone like that "affine function" are you kidding ? please, simplify it (use of words like autonomous and endogenous don't help !!!!!) — Preceding unsigned comment added by 24.91.51.31 (talk) 05:03, 5 January 2012 (UTC)

de?

i don't think the page explained what de is. Saffo.princess (talk) 19:17, 12 May 2010 (UTC)

What am I missing?

Consider that your income is zero. You have certain expenditures c0. Now this theory states, that as your income increases even marginally above zero, so does your consumption, thanks to the c1*Yd part of the equation. However, shouldnt consumption only increase beyond autonomous consumption when income is greater than autonomous consumption?

If you earn 0$ and have to spend 500$ to stay alive (autonomous consumption) your total consumption is 500$. Now when you earn 400$, your autonomous consumption is still 500$ but now you also have induced constumption of c1*400$ (lets say for c1 = 0,8 that equals 320$). That doesnt reflect real life behaviour at all (Im aware that economics mostly doesnt) even though the equation could be slightly modified to account for this problem. In my opinion, there is no way a person with income of 400$ will spend anything on nonessential (non autonomous) things.

So my question is, why doesnt the equation read C = c0 for Yd < c0 and C = c0 + c1 * (Yd - c0) for Yd >= c0 ? —Preceding unsigned comment added by 89.102.129.17 (talk) 15:53, 11 May 2011 (UTC)