Who coined the concept of ""Paradox of Thrift""?

The concept of the "Paradox of Thrift" was popularized and coined by the British economist John Maynard Keynes [3]. This macroeconomic theory suggests that while individual saving is generally considered a virtue, an aggregate increase in the savings rate by all households can lead to a decrease in total national income [1]. According to Keynesian theory, as people save more, they spend less, which reduces aggregate demand and leads to lower production and employment levels. This phenomenon was particularly emphasized in Keynes' seminal 1936 work, 'The General Theory of Employment, Interest, and Money', where he argued that such leakages from the circular flow of income could worsen economic recessions. While earlier thinkers like Adam Smith and Alfred Marshall focused on classical self-correcting markets, Keynes revolutionized economic thought by highlighting how increased thriftiness could paradoxically result in lower total savings due to falling income [1].

Sources

1. [1] https://www.investopedia.com/terms/p/paradox-of-thrift.asp
2. [3] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 4: Determination of Income and Employment > Paradox of Thrift > p. 63