absolute income hypothesis

This has led to the absolute income hypothesis falling out of favor as the consumption model of choice for economists.

Another important development was Kuznets' empirical examination of Keynes' 1936 Absolute Income Hypothesis.

The Keynesian consumption function is also known as the absolute income hypothesis, as it only bases consumption on current income and ignores potential future income (or lack of).

In his 1942 tome Uses of National Income in Peace and War, published by the National Bureau of Economic Research, Kuznets became the first economist to show that the Absolute Income Hypothesis gives inaccurate predictions in the long run (by using time-series data).