A Random Walk Down Maple Lane?: A Critique of Neoclassical Consumption Theory with Reference to Housing Wealth
AbstractThe development of the permanent income/life cycle consumption hypothesis was a key blow to Keynesian and Kaleckian economics, and, according to George Akerlof, it "set the agenda" for modern neoclassical macroeconomics. This paper focuses on the relationship of housing wealth to neoclassical consumption theory, and in particular, the degree to which homes can be treated collectively with other forms of "permanent income." The neoclassical analysis is evaluated as a partly normative and partly positive one, in recognition of the dual function of the neoclassical theory of rationality. The paper rests its critique primarily on the distinctive role of homes in social life; theories that fail to recognize this role jeopardize the social and economic goods at stake. Since many families do not own large amounts of assets other than their places of residence, these issues have important ramifications for the relevance of consumption theory as a whole.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_445.
Date of creation: Apr 2006
Date of revision:
Contact details of provider:
Web page: http://www.levyinstitute.org
Other versions of this item:
- Greg Hannsgen, 2007. "A Random Walk Down Maple Lane? A Critique of Neoclassical Consumption Theory with Reference to Housing Wealth," Review of Political Economy, Taylor & Francis Journals, vol. 19(1), pages 1-20.
- NEP-ALL-2006-04-22 (All new papers)
- NEP-MAC-2006-04-22 (Macroeconomics)
- NEP-PKE-2006-04-22 (Post Keynesian Economics)
- NEP-URE-2006-04-22 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Greg Hannsgen, 2004.
"Borrowing Alone: The Theory and Policy Implications of the Commodification of Finance,"
Economics Working Paper Archive
wp_401, Levy Economics Institute.
- Greg Hannsgen, 2004. "Borrowing Alone The Theory and Policy Implications of the Commodification of Finance," Finance 0402011, EconWPA.
- Denice DiPasquale & Edward L. Glaeser, 1997.
"Incentives and Social Capital: Are Homeowners Better Citizens?,"
Harvard Institute of Economic Research Working Papers
1815, Harvard - Institute of Economic Research.
- DiPasquale, Denise & Glaeser, Edward L., 1999. "Incentives and Social Capital: Are Homeowners Better Citizens?," Journal of Urban Economics, Elsevier, vol. 45(2), pages 354-384, March.
- Denise DiPasquale & Edward L. Glaeser, 1998. "Incentives and Social Capital: Are Homeowners Better Citizens?," NBER Working Papers 6363, National Bureau of Economic Research, Inc.
- Shefrin, Hersh M & Thaler, Richard H, 1988. "The Behavioral Life-Cycle Hypothesis," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 609-43, October.
- Elliott, J Walter, 1980. "Wealth and Wealth Proxies in a Permanent Income Model," The Quarterly Journal of Economics, MIT Press, vol. 95(3), pages 509-35, November.
- Fisher, Jonathan D. & Johnson, David S. & Marchand, Joseph & Smeeding, Timothy M. & Torrey, Barbara Boyle, 2008.
"The retirement consumption conundrum: Evidence from a consumption survey,"
Elsevier, vol. 99(3), pages 482-485, June.
- Johnathan Fisher & David S. Johnson & Joseph Marchand & Timothy M. Smeeding & Barbara Boyle Torrey, 2005. "The Retirement Consumption Conundrum: Evidence from a Consumption Survey," Working Papers, Center for Retirement Research at Boston College wp2005-14, Center for Retirement Research, revised Dec 2005.
- Dolfsma, W.A., 2004.
"Paradoxes of Modernist Consumption – Reading Fashions,"
ERIM Report Series Research in Management
ERS-2004-035-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
- Wilfred Dolfsma, 2004. "Paradoxes of Modernist Consumption - Reading Fashions," Review of Social Economy, Taylor & Francis Journals, vol. 62(3), pages 351-364.
- Kosuke Aoki & James Proudman & Gertjan Vlieghe, 2002. "Houses as collateral: has the link between house prices and consumption in the U.K. changed?," Economic Policy Review, Federal Reserve Bank of New York, issue May, pages 163-177.
- L. Randall Wray, 2005. "The Ownership Society: Social Security Is Only the Beginning," Economics Public Policy Brief Archive ppb_82, Levy Economics Institute.
- Bernanke, Ben S. & Gertler, Mark & Gilchrist, Simon, 1999.
"The financial accelerator in a quantitative business cycle framework,"
Handbook of Macroeconomics,
in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 21, pages 1341-1393
- Ben Bernanke & Mark Gertler & Simon Gilchrist, 1998. "The Financial Accelerator in a Quantitative Business Cycle Framework," NBER Working Papers 6455, National Bureau of Economic Research, Inc.
- Lanse Minkler & Metin Cosgel, 2004.
"Religious Identity and Consumption,"
2004-03, University of Connecticut, Department of Economics.
- Bernanke, Ben S, 1983.
"Nonmonetary Effects of the Financial Crisis in Propagation of the Great Depression,"
American Economic Review,
American Economic Association, vol. 73(3), pages 257-76, June.
- Ben S. Bernanke, 1983. "Non-Monetary Effects of the Financial Crisis in the Propagation of the Great Depression," NBER Working Papers 1054, National Bureau of Economic Research, Inc.
- Tamim Bayoumi & Hali Edison, 2003. "Is Wealth Increasingly Driving Consuption?," DNB Staff Reports (discontinued) 101, Netherlands Central Bank.
- Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-15, March.
- Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
- Dimitri B. Papadimitriou & Edward Chilcote & Gennaro Zezza, 2006. "Are Housing Prices, Household Debt, and Growth Sustainable?," Economics Strategic Analysis Archive sa_jan_06, Levy Economics Institute.
- Martha Starr, 2004. "Consumption, Identity, and the Sociocultural Constitution of "Preferences": Reading Women's Magazines," Review of Social Economy, Taylor & Francis Journals, vol. 62(3), pages 291-305.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Bayoumi, Tamim A, 1993. "Financial Deregulation and Consumption in the United Kingdom," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 536-39, August.
- Greg Hannsgen & Dimitri B. Papadimitriou, 2012. "Fiscal Traps and Macro Policy after the Eurozone Crisis," Economics Public Policy Brief Archive ppb_127, Levy Economics Institute.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie-Celeste Edwards).
If references are entirely missing, you can add them using this form.