New Delhi, March 4 -- Economist John Maynard Keynes came up with the concept of 'the paradox of thrift.' It's an excellent example of the fallacy of composition, where the whole differs from the sum of its parts-a situation where what's good at an individual level may not be so at a systemic macro level.

As Justyn Walsh writes in Investing with Keynes: "Keynes' most famous example of the 'fallacy of composition' was the so-called Paradox of Thrift-which notes that saving is good for the individual, but if all individuals increase their savings then aggregate demand will fall, eventually leading to lower savings for the population as a whole."

How the stock market behaves at different points is another example of the fallacy. As Walsh wr...