Meaning of paradox of thrift | Babel Free

Definitions

A paradox in which an increase in autonomous saving leads to a decrease in aggregate demand and thus a decrease in gross output which will in turn lower total saving.

Examples

“The worse things get, meanwhile, the greater the tendency even for those who still feel secure in their jobs to hoard their cash for fear of what lies around the corner. This is the so-called paradox of thrift: that in a recession, people instinctively try to save their money instead of spending it, and thus inadvertently make things worse.”

CEFR level