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The Notion of Involuntary Economic Decisions

Trygve Haavelmo

Abstract

The Keynesian definition of involuntary unemployment has given rise to much controversy. According to this definition it is useless to discuss problems of involuntary unemployment within a consistent economic model if one of its equations is the classical supply function of labor, because there can be no involuntary unemployment within such a model. Similar problems arise whenever one tries to demonstrate the possibility of involuntary individual economic decisions within a given model of economic behavior. It is the contention of the present writer that the notion of involuntary economic decisions, to become meaningful, must be derived from a comparison between alternative economic models, or frameworks, under which society may collectively choose to operate.