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Home→The Westburn Dictionary of Marketing→P→permanent income hypothesis

permanent income hypothesis

Definition:
This holds that expenditures are based on average income expectations over time. The hypothesis recognizes that consumption patterns are relatively stable over time, which suggests that consumers average out their expenditures, i.e. under inflation they anticipate that they will make good current dissaving, due to price increases, out of future wage increases.

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© Westburn Publishers Ltd 2002, The Westburn Dictionary of Marketing edited by Michael J Baker, ISBN 978-0-946433-01-8. www.themarketingdictionary.com. Entry: [Michael J. Baker], [1998].