There is no question that the rich behave differently from the poor. The real question is to what extent and how can economists and business owners use this information to better achieve prosperity? From an economic perspective, this can be examined by measuring the “marginal propensity to consume” and how it’s affected by fluctuations in prices.

A critical question is brought up in this article: “should an economist observe human behaviour, or assume it?” As Professor Gateman would say, assume nothing. Assumptions often lead to inaccurate predictions which can turn into costly expenses. The main assumption that economists make are that consumers are rational. However, this is far from true in the case of the wealthy versus the underprivileged.

Studies show that poor people are more likely to spend the moment their cash flow increases (a high MPC) whereas rich people tend to plan for the future; they save their money so that they can stay afloat during times of struggle (a low MPC). Business owners should take this information and consider it when planning out crucial aspects of a business, such as pricing, during times of turmoil and also times of prosperity.

http://www.businessweek.com/articles/2013-11-07/economists-discover-the-poor-behave-differently-from-the-rich#r=most%20popular