Weintraub's consumption coefficient: some economic implications and evidence for the UK

Weintraub's consumption coefficient, the ratio of total consumerexpenditure to income from employment, helps to elucidate trendsin the sectoral and functional distributions of income. It simplifiesand adds precision to Kaleckian macroeconomics by showing howdistributions of income affect the level of economic activity.Empirical estimates of the coefficient are presented for theUK from 1972 to 1995. From 1975 onwards, the coefficient hasindicated a marked redistribution of income in favour of capitalist(non-employment) income, accompanied by a significant rise inthe average propensity to consume from capitalist (non-employmentincome). Wealth effects induced by the housing boom of the 1980shave enabled capitalists' income and consumption to continueto increase after 1989 despite a fall in investment.     

Weintraub's consumption coefficient

The author contends that Weintraub's consumption coefficient,the ratio of total consumer expenditure to income from employment,cannot help to elucidate trends in the sectoral and functionaldistributions of income. Nor can it enhance the Kalecki's macroeconomicmodel. It cannot do either of these things because it is distributiondetermined, not distribution determining. Further, it is arguedthat the use of Weintraub's consumption coefficient distractsus from basing our analysis of income distribution on businessmark-ups, which lie at the core of the Kaleckian research program.