{"id":5504,"date":"2021-01-18T13:49:06","date_gmt":"2021-01-18T13:49:06","guid":{"rendered":"https:\/\/davelevy.info\/wiki\/?p=5504"},"modified":"2023-03-06T08:53:03","modified_gmt":"2023-03-06T08:53:03","slug":"duesenburys-ratchet-theorem","status":"publish","type":"post","link":"https:\/\/davelevy.info\/wiki\/duesenburys-ratchet-theorem\/","title":{"rendered":"Duesenbury&#8217;s ratchet theorem"},"content":{"rendered":"<p>I came across <acronym title=\"Duesenbury's ratchet theorem \">this<\/acronym> a long time ago, while studying for my a-levels, so thank you Mr Sidemouth, but I have not heard much about him since. While considering the Tories attempts to reduce the penurious universal credit payments, and my own experiences as I move into retirement I am reminded of the ratchet. Here are my notes &#8230; <!--more--><\/p>\n<p>The author of this theory was <a href=\"https:\/\/en.wikipedia.org\/wiki\/James_Duesenberry\">James Duesenbury<\/a>. It seems he was important for writing &#8216;keeping up with the Joneses&#8217; into economic theory but to me,<\/p>\n<blockquote><p>&#8230; most importantly or most memorably, he posed that people who suffer a negative income shock reduce their consumption slowly, certainly more slowly than they increase it when they get an income increase.<\/p><\/blockquote>\n<p>They do this due to what he called a demonstration effect, but also due to habit. It&#8217;s hard to stop shopping at Waitrose if that&#8217;s what you&#8217;re used to and certainly accommodation and transport costs are sticky and hard to reduce.<\/p>\n<p>In this paper, Supriya Guru looks these and other consumption theories and shows&nbsp; in diagram form the ratchet.<\/p>\n<blockquote class=\"wp-embedded-content\" data-secret=\"keA6Rkevvx\"><p><a href=\"https:\/\/www.yourarticlelibrary.com\/economics\/consumption-function\/3-important-theories-of-consumption-with-diagram\/37756\">3 Important Theories of Consumption (With Diagram)<\/a><\/p><\/blockquote>\n<p><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;3 Important Theories of Consumption (With Diagram)&#8221; &#8212; Your Article Library\" src=\"https:\/\/www.yourarticlelibrary.com\/economics\/consumption-function\/3-important-theories-of-consumption-with-diagram\/37756\/embed#?secret=4Lma71e6Zg#?secret=keA6Rkevvx\" data-secret=\"keA6Rkevvx\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/p>\n<p>I wanted to reproduce the one I first saw, which was something like this,<\/p>\n<div class=\"mceTemp\">\n<dl id=\"attachment_5505\" style=\"width: 650px;\">\n<dt class=\"wp-caption-dt\"><a href=\"https:\/\/davelevy.info\/wiki\/wp-content\/uploads\/2021\/01\/duesenbury-ratchet.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-5505\" src=\"https:\/\/davelevy.info\/wiki\/wp-content\/uploads\/2021\/01\/duesenbury-ratchet.png\" alt=\"\" width=\"650\" height=\"529\" srcset=\"https:\/\/davelevy.info\/wiki\/wp-content\/uploads\/2021\/01\/duesenbury-ratchet.png 650w, https:\/\/davelevy.info\/wiki\/wp-content\/uploads\/2021\/01\/duesenbury-ratchet-300x244.png 300w\" sizes=\"auto, (max-width: 650px) 100vw, 650px\" \/><\/a><\/dt>\n<dd class=\"wp-caption-dd\">Duesenbury&#8217;s ratchet by DFL CC(0)<\/dd>\n<\/dl>\n<\/div>\n<p>His magnum opus was called, <i>Income, Saving and the Theory of Consumer Behavior<\/i>, and if you <a href=\"https:\/\/lmgtfy.app\/?q=Duesenberry+ratchet\">query &#8220;duesenbury ratchet&#8221;<\/a> on google, both it and other comments on its application to macro-economics can be found.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>I came across this a long time ago, while studying for my a-levels, so thank you Mr Sidemouth, but I have not heard much about him since. While considering the Tories attempts to reduce the penurious universal credit payments, and my own experiences as I move into retirement I am reminded of the ratchet. Here&#8230;<\/p>\n","protected":false},"author":1,"featured_media":5506,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_share_on_mastodon":"0"},"categories":[137],"tags":[1570,1571,138,1334],"class_list":["post-5504","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics","tag-consumption","tag-duesenbury","tag-economics-2","tag-macroeconomics"],"share_on_mastodon":{"url":"","error":""},"jetpack_featured_media_url":"https:\/\/davelevy.info\/wiki\/wp-content\/uploads\/2021\/01\/ratchet-brett-jordan-unsplash-w650.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/davelevy.info\/wiki\/wp-json\/wp\/v2\/posts\/5504","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/davelevy.info\/wiki\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/davelevy.info\/wiki\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/davelevy.info\/wiki\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/davelevy.info\/wiki\/wp-json\/wp\/v2\/comments?post=5504"}],"version-history":[{"count":1,"href":"https:\/\/davelevy.info\/wiki\/wp-json\/wp\/v2\/posts\/5504\/revisions"}],"predecessor-version":[{"id":7318,"href":"https:\/\/davelevy.info\/wiki\/wp-json\/wp\/v2\/posts\/5504\/revisions\/7318"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/davelevy.info\/wiki\/wp-json\/wp\/v2\/media\/5506"}],"wp:attachment":[{"href":"https:\/\/davelevy.info\/wiki\/wp-json\/wp\/v2\/media?parent=5504"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/davelevy.info\/wiki\/wp-json\/wp\/v2\/categories?post=5504"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/davelevy.info\/wiki\/wp-json\/wp\/v2\/tags?post=5504"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}