Consumption function for Poland. Is life cycle hypothesis legitimate?

In industrialized countries the rising percentage of households behaves rationally. It is represented by the life cycle hypothesis of determining their incomes. This concept was taken into account in many macroeconometric multicountry models. The W models of the Polish economy assumed the number of such households is small and consequently this approach was neglected. The paper presents the results of a research aimed at empirical testing whether the share of “rational” households in Poland was small and their majority was income constrained. We calculated the expected life cycle income on the basis of information on the structure of employment by age. The empirical study was conducted using annual data for the years 1970−2008. The obtained results show that the share of “rational” households was below 10% in the long run. But in the short run they showed a tendency of increasing up the share to more than 20%.