The marginal utility of money: A modern Marshallian approach to consumer choice

We reformulate neoclassical consumer choice by focusing on [lambda], the marginal utility of money. As the opportunity cost of current expenditure, [lambda] is approximated by the slope of the indirect utility function of the continuation. We argue that [lambda] can largely supplant the role of an arbitrary budget constraint in partial equilibrium analysis. The result is a better grounded, more exible and more intuitive approach to consumer choice.

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Year of publication:	2011
Authors:	Friedman, Daniel ; Sákovics, József
Publisher:	Santa Cruz, CA : University of California, Economics Department
Subject:	budget constraint \| separability \| value for money

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Series:	Working Paper ; 684
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	664664938 [GVK] hdl:10419/64545 [Handle]
Classification:	D01 - Microeconomic Behavior: Underlying Principles ; D03 - Behavioral Economics; Underlying Principles ; D11 - Consumer Economics: Theory
Source:	EconStor

Persistent link: https://www.econbiz.de/10010288173