Suppose a household considers only current income in making consumption decisions. This is an example of:

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Myopia is the assumption that people only consider their current income when making consumption decisions, and do not anticipate future changes in income or account for long-term savings and investments. Ricardian equivalence, the permanent-income hypothesis, and the life-cycle model all incorporate some notion of forward-looking behavior and planning for the future.

Suppose a Household Considers Only Current Income in Making Consumption