Propensity To Save

Propensity To Save

Propensity to Save, the obverse of the propensity to consume. Saving is defined as that part of income which is not consumed, and the marginal propensity to consume is defined as the increase (or de-crease) in consumption spending resulting from a given increase (or decrease) in income.

Property, the legal right to exclusive use of resources and to exclude other people from their possession, use or control. The resources are usually tangible, such as personal possessions and physical means of production, but they may also be intangible, such as patented ideas. Property rights may vest in private persons, groups or public authorities.

In Britain about one-fifth of the physical assets buildings, equipment, etc. are owned by public authorities. Private property is very unequally distributed. In the mid 2000's one-third of the population was estimated to have had no 'net worth' (liquid assets plus securities, land and buildings, private businesses, loans and motor-cars, less overdrafts and debts), over one-half less than £100, one-twentieth more than £65,000 each (and 6 per cent of the total).

Property is one of the fundamental social institutions. Its economic rationale is that ownership encourages the careful husbanding of scarce resources. An example is the wasteful exploitation of resources in which there are no property rights, such as the overfishing of deep-sea fishing grounds. Economic arguments have been used to support private property at least since Aristotle, the main ones being that widespread ownership means dispersed powers of initiative, and that the accumulation of property provides a powerful stimulus to work and thrift.

In present-day economic analysis and policy, property features prominently. For example, it is a determinant of the distribution of income (in the early 2009 incomes from property made up less than 20 per cent of total personal incomes in the U.K.). Inheritance, gift, capital gains and other taxes on property are analysed in public finance. The use of property by its owners may confer or impose (indiscriminate) gains or costs on other members of the community. To this extent the pattern of market costs and rewards that influence the extent and rejection of the use of resources may only partially reflect costs and benefits to the community as a whole. This is seen as a defect of the operation of markets and a case for Government intervention. The concentration of control of property in joint-stock companies is investigated as a basis of monopoly power. The divorce of ownership from control in joint-stock companies is of central economic importance as a characteristic of modern industrial organization.

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this site is therefore not a final statement of economic doctrine.

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