Scott Sumner says "give up on that MPC stuff, it was discredited decades ago".
Paul Krugman says
It’s true that at any given point in time the rich have much higher savings rates than the poor. Since Milton Friedman, however, we’ve know that this fact is to an important degree a sort of statistical illusion. Consumer spending tends to reflect expected income over an extended period.
So that gets us to Milton Friedman.
From the Handbook of consumer finance research, edited by Jing Jian Xiao, this note:
So that gets us to the permanent income hypothesis.
The Friedman reference is to: A theory of the consumption function. Princeton, NJ: Princeton University Press.
Note that the excerpt from the Handbook of consumer finance research is based on "perceived future income"... On expectations. I'm not big on expectations.
Anyway, this is some of what Wikipedia has to say on the Permanent Income Hypothesis:
The permanent income hypothesis (PIH) is a theory of consumption that was developed by the American economist Milton Friedman...
Friedman concluded that the individual will consume a constant proportion of his/her permanent income; and that low income earners have a higher propensity to consume; and high income earners have a higher transitory element to their income and a lower than average propensity to consume.
1. "low income earners have a higher propensity to consume"
2. "high income earners have ... a lower than average propensity to consume"
Sounds to me like it supports the idea of the Marginal Propensity to Consume.
Is Wikipedia pulling my leg?