Economics at your fingertips  

Growth theory under heterogeneous heuristic behavior

Orlando Gomes ()

Journal of Evolutionary Economics, 2021, vol. 31, issue 2, No 7, 533-571

Abstract: Abstract Over the last decades, conceptual frameworks formulated to address the dynamics of economic growth have hypothesized, discussed and tested a large number of different assumptions concerning the role of capital accumulation, labor productivity, learning-by-doing, formal education, innovation, and diffusion of ideas. Underlying all these theoretical contributions is, on the demand side, a pervasive and apparently unshakable structure of analysis: economic agents invariably set an optimal intertemporal consumption plan which allows then to maximize utility over an infinite horizon. Such behavior, however, suggests a planning ability that agents often lack. In fact, household decisions are frequently designed on the basis of heuristics or rules-of-thumb that, although not optimal, are reachable under the cognitive constraints typically faced by human beings. This paper revisits some of the most prominent models of the mainstream growth theory, taking a specific heuristic to account for consumption-savings decisions. The heuristic, which allows for the consideration of distinct profiles of saving behavior across individual agents, is a static rule, which might suggest a return to a Solow-like growth analysis. Notwithstanding, the adopted rule-of-thumb encloses a series of novel and relevant implications for growth theory. Such implications are duly highlighted and discussed in this study.

Keywords: Growth theory; Consumption-savings heuristic; Non-optimal growth; Intertemporal choice; Neoclassical growth; Endogenous growth (search for similar items in EconPapers)
JEL-codes: E21 O41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

DOI: 10.1007/s00191-020-00674-8

Access Statistics for this article

Journal of Evolutionary Economics is currently edited by Uwe Cantner, Elias Dinopoulos, Horst Hanusch and Luigi Orsenigo

More articles in Journal of Evolutionary Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2023-03-07
Handle: RePEc:spr:joevec:v:31:y:2021:i:2:d:10.1007_s00191-020-00674-8