Abstract
In this paper, two contemporary perspectives on consumption are explicated and analyzed for their implications on the notion of “consumer debt.” It is argued that Milton Friedman’s Permanent Income Hypothesis sees consumer debt as an amoral phenomenon, which is contrary to the Rajan Hypothesis. This last hypothesis so is argued, considers debt as something which bears responsibility by the creditor. This is placed in a larger discussion of the normative values which underly economic theories. This research shows how implicit moral notions, which underly economic theory, are an essential part of the economic discipline and it reveals how these notions play a crucial role in considering economic models and policy.
Evidence for Practice
Keywords: Permanent income hypothesis, Rajan hypothesis, consumer debt, phenomenological study of debt
Citation: Huijben, S. (2023). Implicit moral notions of debt in two theories of consumption. Public Note, 10(2), 39-42.
In this paper, two contemporary perspectives on consumption are explicated and analyzed for their implications on the notion of “consumer debt.” It is argued that Milton Friedman’s Permanent Income Hypothesis sees consumer debt as an amoral phenomenon, which is contrary to the Rajan Hypothesis. This last hypothesis so is argued, considers debt as something which bears responsibility by the creditor. This is placed in a larger discussion of the normative values which underly economic theories. This research shows how implicit moral notions, which underly economic theory, are an essential part of the economic discipline and it reveals how these notions play a crucial role in considering economic models and policy.
Evidence for Practice
- Theories have value-laden implications, and these should be considered when designing economic policy
- An analysis of economic theories can help to uncover the relationship between economic theories and the real world
- Deconstructing implicit assumptions may provide a guideline for fostering a more sustainable future
Keywords: Permanent income hypothesis, Rajan hypothesis, consumer debt, phenomenological study of debt
Citation: Huijben, S. (2023). Implicit moral notions of debt in two theories of consumption. Public Note, 10(2), 39-42.
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