American Consumers Facing Inflation, 1965-1979 : The Economists' Accounts

This article deals with the economists' depiction of American consumers' attitudes and behavior in relation to inflation, 1965-79. There were two sides in the debate, the neo-Keynesians and the monetarists. The former played down the costs of inflation regardless of the public's perception to the contrary, and adopted a view of the consumer as economically illiterate that had been already disproved in the 1950s and the developments of the 1970s contradicted altogether. The latter acknowledged the plight of the consumer, making it a chief reason for denouncing demand management policies, and depicted consumers as informed agents reacting to price rises. Preliminarily, George Katona's analysis of American consumers' attitude to inflation in the two decades after 1945 is addressed. The following section reconstructs consumers' choices and attitudes in 1965-79, relying chiefly on magazine and newspaper reports. The economists' views are then considered