Consumption (Economics)

This thesis examines the significance of the real interest rate and stock prices as explanatory variables in the aggregate consumption function. This study applies the methodologies of OLS regression analysis and tests of cointegration to examine the relationship between stock prices and consumption. The empirical results suggest that stock prices are a significant factor in the modified aggregate consumption function. Consumers, perceiving stock prices to be an indicator of their wealth, are making more expenditures on durable goods as they perceive increases in stock values to be permanent. Finally, the results of the tests for cointegration suggest that there is no long-run equilibrium relationship between stock prices and consumption.

This thesis reviews the major literature associated
with the Life Cycle Hypothesis of Consumption and Saving as
formulated by Franco Modigliani, Richard Brumberg and Albert
Ando. The initial microeconomic formulation of the theoretical
model of individual consumer behavior in terms of life
time planning was examined under conditions of both stability
and growth. Next, the attempts to seek empirical support for
the propositions of the theory in cross-section survey data and
the tests of the aggregate implications of the theory were
examined. It was concluded that within the current conceptual
framework of macroeconomics the theory has a fairly
high level of explanatory force, and should further future
inquiry.

This thesis tests whether a simple income-expenditure
model is a better predictor of induced
expenditure and thus income than a simple quantity
theory model. A spectral analysis was performed
using alternative definitions of money, income and
expenditure. From the results of cross spectral
analysis, it was concluded that the money supply
is the better predictor of short run (8 months -
3 years) fluctuations in consumption and thus in
income.

In many markets sellers have to make decisions on the rate of price change for a product. Prices can be increased or decreased by making a single large change, or as by making multiple smaller changes over time, leading to the same final price. The concern of sellers is the consumer response, in terms of the product's demand. With the exception of deliberate demarketing, sellers seek to minimize demand decreases in response to price increases, and maximize the positive impact in terms of increased purchases, when prices are decreased. Price changes can be made in a short period, or over a more extended duration. In some buying contexts the market may be characterized by highly fluctuating prices that create price uncertainty in the minds of the consumer. Further, consumers give varying levels of importance or weight to their past purchase experience when they make purchase decisions. This research develops theory and examines hypotheses to examine the effectiveness of single versus multiple price change strategies over time, in different contexts, using a prospect theory and reference price framework. The study finds (1) The greater the number of purchase occasions between successive price changes, the lesser is the impact on demand of a strategy of multiple price changes. (2) In situations of high price uncertainty strategies of multiple price increases lead to smaller demand decreases, and strategies of multiple price increases lead to higher demand increases, when compared to price certain situations. (3) The importance or weight assigned by consumers to the last purchase experience does not appear to significantly impact the outcomes of intertemporal price strategies. (4) The impact of price decreases appears to be more than that of price increases, in the two contexts of uncertainty, and a greater weight being assigned to the last purchase occasion. In previous research prospect theory has been used primarily in a static framework, and the prospect theory approach has used reference prices to analyze the impact of price changes in product bundling situations. This research extends the prospect theory and reference price framework to price change strategies over time, where reference prices vary and adapt.

The present work uses statistical mechanics tools to investigate the dynamics of markets, prices, trades and wealth distribution. We studied the evolution of market dynamics in different stages of historical development by analyzing commodity prices from two distinct periods : ancient Babylon, and medieval and early modern England. We find that the first-digit distributrions of both Babylon and England commodity prices follow Benford's Law, indicating that the data represent empirical observations typically arising from a free market. Further, we find that the normalized prices of both Babylon and England agricultural commodities are characterized by stretched exponential distributions, and exhibit persistent correlations of a power law type over long periods of up to several centuries, in contrast to contemporary markets. Our findings suggest that similar market interactions may underlie the dynamics of ancient agricultural commodity prices, and that these interactions may remain stable across centuries. To further investigate the dynamics of markets, we present the analogy between transfers of money between individuals and the transfer of energy through particle collisions by means of the kinetic theory of gases. We introduce a theoretical framework of how micro rules of trading lead to the emergence of income and wealth distribution. Particularly, we study the effects of different types of distribution of savings/investments among individuals in a society and different welfare/subsidies redistribution policies. Results show that while considering savings propensities, the models approach empirical distributions of wealth quite well. The effect of redistribution better captures specific features of the distributions which earlier models failed to do. Moreover, the models still preserve the exponential decay observed in empirical income distributions reported by tax data and surveys.

The intention of this exhibition is to educate the viewer about the hidden impacts that result from simple choices of consumption. This is a critique of the materials economy and the responsibilities of the designers, consumers and industries that contributed to its success. The critique is expressed through four dominant and unsustainable consumer products: water bottles, plastic shopping bags, cigarette filters and farm chemicals, as each has its own specific story of consumption. The form is derived from manufacturing history, statistical data, and profiles of consumer behaviors. Graphic design is utilized in both formal and non-formal methods with the goal of communicating specific messages to the viewer as they progress through the exhibition space.

A 'wave of nostalgia' has gripped the US leading to nostalgic fashions, furniture, television programming and even food. The marketing literature suggests that nostalgic-related consumption is the result of an aging population. It has been proposed that the purchase of nostalgic-products and services is an attempt by mature consumers to return psychologically to the ease, certainties and conflict free periods that existed or seemed to exist during their childhood or adolescence. This paper proposes that discontinuity, as argued by Davis (1979), is a better explanation for why people develop a preference for and consume nostalgic goods. Although some insights have been developed, research focused only on mature consumers and is rather limited in offering alternative explanations for the evocation of nostalgic feelings. MANCOVA was the primary method used to test hypotheses. Findings of this study indicate that discontinuity does not necessarily lead to nostalgia and preference for nostalgic products varies.

Culture Jammers, an activist guerilla-like movement, entered the global scene in the 1990s and, through public performances, attempt to draw attention to their claim that the US economic structure is facing a fundamental need to shift away from a consumer-oriented capitalist economy. As an alternative, the activists propose--True Cost economics, a model that would include the costs of negative production and consumption externalities in the pricing of commodities. In this paper, I focus on culture jammers' critique of neoclassical economics, more specifically, the clash of the--new paradigm (True Cost economics) and the old paradigm (neoclassical economics). In evaluating whether True Cost economics is a feasible alternative, I graphically examine how the True Cost solution and the neoclassical market model correct for negative externalities to reveal similarities in the two models.

My project "How Green is the Mouse?" analyses the ways in which the Disney Company utilizes various green marketing strategies in an effort to appeal to the growing number of eco-conscious consumers. My study examines different strategies of green marketing and evaluates the use of these strategies in relation to discussions of the "greenwash" concept. Examples of such strategies include green selling, when a company continues to manufacture a pre-existing product with changes only in marketing and not policy or output, and green partnerships, when a company undertakes a more eco-friendly appearance simply by collaborating with a well-known environmental organization. In this study, I investigate the various methods of green marketing utilized throughout the parks and other attraction areas of Walt Disney World, located near Orlando, Florida.