A Theoretical Proposal for Incorporating Human Adaptation into the Consumption Function: A Conditional Interaction Approach

This paper proposes an innovative empirical modification to the classical double-log consumption function by incorporating human adaptation as a conditional moderator. Traditional macroeconomic models assume a constant elasticity of consumption with respect to material resources. However, behavioral evidence suggests that human adaptation—the psychological and physical habituation to wealth—acts as a dampening mechanism. Using labor effort (labor) as an operational proxy for human adaptation, we introduce an interaction term to test this conditional relationship.