https://market.subwiki.org/w/index.php?action=history&feed=atom&title=Permanent_income 2026-09-27T17:25:56Z Revision history for this page on the wiki MediaWiki 1.41.2 https://market.subwiki.org/w/index.php?title=Permanent_income&diff=667&oldid=prev 2011-07-25T19:15:31Z

<p>Created page with &quot;==Definition== The &#039;&#039;&#039;permanent income&#039;&#039;&#039; of an individual or household refers to the anticipated/planned average income over a long period of time. It differs from short run in...&quot;</p> <p><b>New page</b></p><div>==Definition==<br /> <br /> The &#039;&#039;&#039;permanent income&#039;&#039;&#039; of an individual or household refers to the anticipated/planned average income over a long period of time. It differs from short run income in the following important ways:<br /> <br /> * Short run income is more affected by unanticipated random fluctuations, whereas for permanent income, averaging out over a longer period makes the random fluctuation less important.<br /> * Short run income is affected by periodic seasonal fluctuation, whereas permanent income averages out the seasonal fluctuations.<br /> * Short run income is unduly influenced by one&#039;s current life stage, whereas permanent income averages over various life stages. For instance, a person studying a subject with highly lucrative career opportunities may have a negative short run income but a highly positive permanent income.<br /> <br /> The [[permanent income hypothesis]], proposed by Milton Friedman, states that the [[average propensity to consume]] and [[average propensity to save]] are influenced more by permanent income than by the transitory component of income (which is subject to random and seasonal fluctuations).<br /> <br /> ==Related notions==<br /> <br /> * [[Permanent income hypothesis]]<br /> * [[Consumption smoothing]]</div>

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