| Abstract | Is it the difference of income level or that of the life cost expenditure for the same income among consumers that decides the consumer spending decision？This is a great theoretical question about the consumer behavior that needs to be discriminated deeply. In the traditional consumption function theory based on the homogeneous income hypothesis, the key heterogeneous fact that the different consumers need to pay different life costs for the same income, which may impact the consumption decision, is neglected. So this hypothesis has been lack of the credible micro-fact base. In this paper, the theoretical mechanism that the essence of consumption lies in maintaining the equilibrium of the cost-benefit of life is revealed, the heterogeneous income hypothesis which accords with the common fact of consumer behaviors is given, and a new consumer equilibrium model about the consistency of production-consumption decision is constructed. According to the empirical study, many theoretical puzzles of consumer behavior such as the excessive saving of Chinese, the exaggerated discount of American and so on all can be made clear validly based on the frame of consumption function theory based on life cost hypothesis. In addition, based on the different changing tendency of the consumption rate of different habitants depending on the change of the pay of life cost for per unit income, ‘Three Empirical Puzzles in Consumption Function Theory’ can be explained effectively. According to this paper，the consumer equilibrium of the consistency of production-consumption decision based on the life cost hypothesis is more basic and important than that of the pure consumer based on the homogeneous income hypothesis, and such may provide a new theoretical foundation for constructing a consumer behavior theory that could make the consumer and producer more uniform intrinsically. |