James S. Duesenberry is a professor of economics at Harvard University. His major field of interest is monetary theory. Early in his career he was very interested in economic sociology, in fact, he, along with Dr. Francis X. Sutton, were the first pr ofessors at Harvard to teach "The Sociological Analysis of Economic Behavior".
Duesenberry is probably best known for his relative income theory. This theory focuses on the determinants of an individual household's consumption behavior rather than on major structural changes in the aggregate economy. According to Duesenbe rry, an individual will try to maintain his or her self-image and sense of identity with his or her peer group through consumption behavior. As a result, the consumer tends to be less responsive to income changes than one assumes under the simple income consumption theory. He explains the direct relationship between consumption and income that can be found in the long-run as due to the fact that the consumer will develop peer groups that correspond to their income level. (you can definitely see the inf luence of sociology in this theory) The underlying assumption of his theory is that consumers base their spending on income relative to that of his or her peer group. Therefore, this theory modifies the Keynesian disposable income formulation b y using current income relative to the income of the peer group as the main determinant of consumption.
Works by James S. Duesenberry:
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