The ratchet effect, also known as the wheel-locking effect, refers to the irreversibility of people's consumption habits after they are formed, that is, it is easy to adjust upward but difficult to adjust downward.

Especially in the short term, consumption is irreversible and its habitual effect is large.

This habit effect makes consumption depend on relative income, that is, relative to one's past peak income.

Consumers are prone to increase consumption as their income increases, but are less likely to reduce consumption as their income decreases, resulting in a short-term consumption function with a positive intercept.

This characteristic is called the ratchet effect.

From a personal point of view, we can neither prohibit nor indulge our desires. We must control our excessive and insatiable desires.

If there are no restrictions on one's own desires, excessive indulgence in luxury, and failure to cultivate frugal living habits, it will inevitably make the ancient saying that "you can't get rich for more than three generations" become inevitable, and "a gentleman who has many desires will be greedy".

The desire for wealth and honor is in vain, and misfortunes are imminent; the villain has many desires, and seeks excessive uses, which leads to ruin of one's family and one's life. This is the situation in which one must bribe when one is in office, and one must steal when one lives in one's hometown."

Although some successful entrepreneurs in the West have wealthy families, they still have very strict requirements for their children. They never give their children more pocket money, and even let their children work around during the winter and summer vacations.

These successful entrepreneurs do not expect their children to make more money for themselves, but they hope that their children will understand how hard-earned every penny is and know how to be frugal and independent.

This is particularly evident in Bill Gates.

Bill Gates, the founder of Microsoft, is the world's richest man, with a total personal assets of US$46 billion.

However, he said in an interview with local media in Paris that he would return his huge inheritance to society and use it for charity, while only passing on a few million dollars to his three children.

Bill Gates' philanthropy began in the fall of 1993.

At that time, he and Melinda, who later became his wife, and others traveled to Africa. The extreme poverty of the local people aroused Gates's heart.

Gates sighed and established a $94 million foundation.

In January 2000, Gates merged the two original foundations to form the "Bill and Melinda Foundation."

This foundation is led by his father, Gates Sr., and has become the largest charitable foundation in the world, with a total amount of US$24 billion.

Gates Sr. said that his retirement life was full of fun.

He spends much of his time "squandering" the wealth earned by his son, donating the money to medical and educational programs around the world.

Gates believes that having a lot of unearned wealth is not a good thing for a child who is at the starting point of life. He believes that a child's life and potential should have nothing to do with their wealth or poverty.

Bill Gates said that he and his wife are aware of the many inequalities that still exist in health, education, research and other fields.

Therefore, he decided to use his wealth to eliminate such inequality.

He also hopes that other wealthy people can return their property to society and use it to solve the inequalities that exist in society.