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Title:The marginal utility of money: A modern Marshallian approach to consumer choice PDF Logo
Authors:Friedman, Daniel
Sákovics, József
Issue Date:2011
Series/Report no.:Working Papers, UC Santa Cruz Economics Department 684
Abstract:We reformulate neoclassical consumer choice by focusing on [lambda], the marginal utility of money. As the opportunity cost of current expenditure, [lambda] is approximated by the slope of the indirect utility function of the continuation. We argue that [lambda] can largely supplant the role of an arbitrary budget constraint in partial equilibrium analysis. The result is a better grounded, more exible and more intuitive approach to consumer choice.
Subjects:budget constraint
separability
value for money
JEL:D01
D03
D11
Document Type:Working Paper
Appears in Collections:Working Papers, Economics Department, UC Santa Cruz

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