What is the ratchet effect? What does the ratchet effect mean

Especially in the short term, consumption is irreversible, and its habit effect is larger. This habitual effect makes consumption dependent on relative income, that is, relative to one's past peak income.

Introduction: This effect was proposed by the economist Dusenbey. The classical economist John Maynard Keynes advocated that consumption is reversible, that is, a change in the absolute income level must immediately cause a change in the level of consumption. In response to this view, Dusenbay argues that this is practically impossible, because the consumption decision cannot be an ideal plan, and it also depends on consumption habits.

This consumption habit is influenced by many factors such as physiological and social needs, personal experiences, consequences of personal experiences, etc. In particular, the consumption standards reached by individuals during the peak income period play a very important role in the formation of consumption habits.

In fact, the ratchet effect can be summed up by a famous sentence by Sima Guang, a politician and writer in the Song Dynasty: from thrift to luxury, from luxury to thrift. This sentence comes from a letter he wrote to his son Sima Kang "Training and Thrift", in addition to the famous statement of "from thrift to luxury, from luxury to thrift", he also said:

thrifty, Lourdes also; Extravagant, evil is also great", Sima Guang adheres to the innocent family style, does not like luxury and waste, advocates frugality as beauty, he wrote this family letter to warn his son not to be contaminated with gentleness, to maintain the family tradition of frugality and honesty.

It is true that the ratchet effect is due to a kind of human nature, and people are born with desires, "hungry and hungry, cold and ambiguous", which is the innate desire of human beings. When people have desires, they will do everything possible to find satisfaction.

It refers to the irreversibility of people's consumption habits after they are formed, that is, it is easy to adjust consumption upwards and difficult to adjust consumption downwards.

<> "The Ratchet Effect. Conceptual interpretation.

It refers to the irreversibility of people's consumption habits after they are formed, that is, it is easy to adjust upwards and difficult to adjust downwards. In particular, macro masking is in a relatively short period of time, consumption is irreversible, and its habit effect is larger.

Contextual applies. This effect can be summed up in a sentence of the ancients: from thrift to luxury, from luxury to thrift.

Our consumption habits are affected by many factors, especially the consumption standards reached by individuals during the peak income period, which plays a very important role in the formation of consumption habits. Therefore, we should pay attention to cultivating good consumption habits, and should refrain from excessive, even insatiable luxury.

The meaning of the ratchet effect is introduced as follows:

The "ratchet effect" originally came from the study of the planned economic system of the former Soviet Union, and the American economist Dusheng Bailey later used the concept. This theory holds that it is easy for consumers to increase consumption and reduce consumption.

This is because people who have always lived a high standard of living, even if their real income decreases, most of them will not immediately lower their consumption standards, but will continue to maintain a fairly high level of consumption. That is, once the consumption "index" goes up and is quietly hidden, it is difficult to come down again, just like a "ratchet", which can only move forward, not backward.

This irreversible consumption behavior of consumers has tremendous energy efficiency in times of recession, depression and recovery, and can even bring the economy back to prosperity. However, judging from the current situation of China's economic "overheating", its negative role should not be underestimated. The increase in the consumer price index in February and the spring of steel and oil have all revived the debate on inflation in all walks of life in China.

In this case, if the tourism market enters the peak season too early, the first continues to rise, although it will promote the development of China's tourism industry to a certain extent, but on the other hand, it will increase the danger of China's price index rising.

In this case, it is only ordinary people who suffer. On the one hand, this has prompted China's prices to rise faster and the pressure of inflation to be greater; On the other hand, since the real income of consumers remains unchanged, their real incomes will undoubtedly decrease after prices**, and consumers will not reduce their consumption spending at this time due to the "ratchet effect".