Comments on: Is the Income Effect Mandatory? http://www.kipesquire.net/2007/11/is-the-income-effect-mandatory/ A Stitch in Time Saves Nine ... But Haste Makes Waste Mon, 29 Nov 2010 16:02:21 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: David_Z http://www.kipesquire.net/2007/11/is-the-income-effect-mandatory/comment-page-1/#comment-5648 David_Z Fri, 30 Nov 2007 02:48:04 +0000 http://www.kipesquire.net/?p=3756#comment-5648 There are plenty of reasons to discount the mandatoriness of the income effect, not the least of which is diminishing marginal utility for <i>everything</i> coupled with time preference which varies among individuals. Rest assured, Kamprad's unspent income isn't wasting away under a mattress, or in a checking account. It's being saved and invested, increasing the capital stock (and hence productivity) of the rest of the world. The more he saves now, the more (comparatively) he'll be able to buy in the future. There are plenty of reasons to discount the mandatoriness of the income effect, not the least of which is diminishing marginal utility for everything coupled with time preference which varies among individuals. Rest assured, Kamprad's unspent income isn't wasting away under a mattress, or in a checking account. It's being saved and invested, increasing the capital stock (and hence productivity) of the rest of the world. The more he saves now, the more (comparatively) he'll be able to buy in the future.

]]> By: Michael http://www.kipesquire.net/2007/11/is-the-income-effect-mandatory/comment-page-1/#comment-5647 Michael Thu, 29 Nov 2007 19:16:19 +0000 http://www.kipesquire.net/?p=3756#comment-5647 I suppose I just don't get it. So he doesn't spend all his money on material things. That is not a cheapskate or even frugal. It is someone who likes a simpler lifestyle. Are the plan trips for pleasure? Then I would think that classifies as a splurge. Does he buy a lot of that "affordable" furniture? There are a lot of people who would consider buying anything new to be too expensive...hence GCF (formerly Goodwill) stores. <BR /> <BR />I'm with Tony, I've reached my own plateau and am comfortable. Just because I earn a lot doesn't mean I have to spend a lot. I'm saving that to spend later when I don't feel like earning anymore! I suppose I just don't get it. So he doesn't spend all his money on material things. That is not a cheapskate or even frugal. It is someone who likes a simpler lifestyle. Are the plan trips for pleasure? Then I would think that classifies as a splurge. Does he buy a lot of that "affordable" furniture? There are a lot of people who would consider buying anything new to be too expensive…hence GCF (formerly Goodwill) stores.

I'm with Tony, I've reached my own plateau and am comfortable. Just because I earn a lot doesn't mean I have to spend a lot. I'm saving that to spend later when I don't feel like earning anymore!

]]> By: Tony http://www.kipesquire.net/2007/11/is-the-income-effect-mandatory/comment-page-1/#comment-5646 Tony Thu, 29 Nov 2007 15:07:09 +0000 http://www.kipesquire.net/?p=3756#comment-5646 I don't have nearly as many material things as I could, but I grow increasingly convinced that I already have more than I need. Somewhere in my recent past, I hit a plateau where I just don't care as much about stuff. Even though I expect my income to continue increasing, I expect my desire for stuff to continue declining. <BR /> <BR />To put it in the perspective of the article, I cut my own hair, as well. I haven't paid for a haircut in more than a decade. I like my hair short and boring. Why pay needlessly for that? <BR /> <BR />However, I find myself more willing to pay for experiences. Even though it's a significant expense, I plan to take part in fantasy camp with the Phillies in Jan. '09. I'll have almost nothing tangible after that, but I'll get to live out a dream, even if it's brief and purchased rather than long and earned. I don't have nearly as many material things as I could, but I grow increasingly convinced that I already have more than I need. Somewhere in my recent past, I hit a plateau where I just don't care as much about stuff. Even though I expect my income to continue increasing, I expect my desire for stuff to continue declining.

To put it in the perspective of the article, I cut my own hair, as well. I haven't paid for a haircut in more than a decade. I like my hair short and boring. Why pay needlessly for that?

However, I find myself more willing to pay for experiences. Even though it's a significant expense, I plan to take part in fantasy camp with the Phillies in Jan. '09. I'll have almost nothing tangible after that, but I'll get to live out a dream, even if it's brief and purchased rather than long and earned.

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