relative-income hypothesis

relative-income hypothesis

the hypo thesis that it is not a person's or a nation's absolute income that matters but his or its relative income. If this is so, then since all individuals or countries cannot become relatively better off, the pursuit of growth for growth's sake becomes futile. See alsoCONSPICUOUS CONSUMPTION.
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2) The Duesenberry relative-income hypothesis, which highlights the interdependence of individual consumption behaviour and its irreversibility over time, has been found to explain the consumption behaviour not only in developed countries but in developing countries as well.