paradox of thrift



Economic concept that if everyone tries to save an increasingly larger portion of his or her income, they would become poorer instead of richer. This is because the economy will slow down from reduction in demand and the very same people would lose their jobs. This theory, however, applies mainly to Keynesian economics where increased savings represent a diminishing circular flow of income.

Use paradox of thrift in a sentence

  • You may find yourself in a state of paradox of thrift and will need to decide if you want to get out of it or not.

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  • The paradox of thrift was not something I wanted to pay attention to because I really liked to save my money.

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  • The paradox of thrift was experienced in 2008 when many people stopped spending as well, theoretically this is a fun concept to play with.

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