LCH
An economic theory that explains the spending and saving habits of people over a lifetime. The Life-Cycle Hypothesis (LCH) model was developed by Franco Modigliani and his student Richard Brumberg. The concept assumes every individual base his or her consumption on a constant percentage of his or her expected life income. Their expenses varies as a person may make purchases such as buying a new home, starting his or her own family, and beginning a professional career. It also concludes young individuals are borrowing in their future income while aging and retired individuals use their savings for their expenses.
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