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Frank H. Knight on Social Values in Economic Consumption. An archival note

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  • Luca Fiorito,
  • Massimiliano Vatiero

Abstract

This note reproduces an unpublished paper on "Social Values in Economic Consumption" which Knight prepared for the Social Science Research Council (SSRC) Summer Conference, on Nantucket, Massachusetts in June 1931. This paper sheds new light on Knight in two important respects. First, it presents, in a more systematic fashion, Knight’s criticism of what he perceived to be the then standard theory of consumption. Specifically, Knight argued that an individual's consumption is dictated more by his income in relation to others than by mere utility maximization—a notion now commonly known as relative income hypothesis. In this connection, Knight also pointed out that a general increase in income, not only leaves the individual’s relative position in society unaltered but makes her/his situation worse off due to the peculiar characteristics of the market for “personal services.†Second, this unpublished address provides further evidence of how, in spite of some substantial differences in terms of methodology, his research interests converged in many respects with those of the institutionalists.

Suggested Citation

  • Luca Fiorito, & Massimiliano Vatiero, 2021. "Frank H. Knight on Social Values in Economic Consumption. An archival note," DEM Working Papers 2021/03, Department of Economics and Management.
    • Handle: RePEc:trn:utwprg:2021/03
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    References listed on IDEAS

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    1. Frank H. Knight, 1922. "Ethics and the Economic Interpretation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 36(3), pages 454-481.
    2. Rutherford,Malcolm, 2013. "The Institutionalist Movement in American Economics, 1918–1947," Cambridge Books, Cambridge University Press, number 9781107626089.
    3. Luca Fiorito & Massimiliano Vatiero, 2018. "Positional goods and social welfare: a note on George Pendleton Watkins’ neglected contribution," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 25(3), pages 460-472, May.
    4. D. Wade Hands, 2006. "Frank Knight and pragmatism," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 13(4), pages 571-605.
    5. Vatiero, Massimiliano, 2013. "Positional goods and Robert Lee Hale's legal economics," Journal of Institutional Economics, Cambridge University Press, vol. 9(3), pages 351-362, September.
    6. Ross Emmett, 2006. "De gustibus est disputandum: Frank H. Knight's reply to George Stigler and Gary Becker's 'De gustibus non est disputandum' with an introductory essay," Journal of Economic Methodology, Taylor & Francis Journals, vol. 13(1), pages 97-111.
    7. Knight, Frank H., 1922. "Ethics and the Economic Interpretation," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 36, pages 454-481, May.
    8. J. Daniel Hammond, 1991. "Frank Knight's Antipositivism," History of Political Economy, Duke University Press, vol. 23(3), pages 359-381, Fall.
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