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Published on: March 19, 2014
The evolution of consumption and its welfare effects
Ulrich Witt1,2
1Max Planck Institute for Science of Human History, Jena, Germany.
Summary
Rising incomes and consumption opportunities alter motivational forces, changing preferences and consumption patterns. This evolution in consumer behavior may not always increase welfare, especially at high spending levels.
Area of Science:
- Behavioral Economics
- Consumer Psychology
- Evolutionary Biology
Background:
- Consumption patterns evolve with rising incomes and opportunities.
- Underlying motivational forces drive consumer preferences and actions.
Purpose of the Study:
- To explain the evolution of consumption based on a theory linking preferences to motivational forces.
- To analyze the welfare effects of consumption growth and transformation.
Main Methods:
- Integrates insights from biology, behavioral science, and psychology.
- Develops a theoretical framework connecting preferences, motivation, and consumption.
- Analyzes welfare implications using economic and psychological perspectives.
Main Results:
- Secular income growth alters motivational forces, leading to preference changes and transformed consumption expenditure structures.
- Consumption growth does not guarantee welfare increases, particularly when spending capacity is high.
- Measuring welfare effects is ambiguous due to preference changes and reference point dependency.
Conclusions:
- The motivations driving consumption growth may not align with welfare maximization.
- The normative basis for advocating continuous consumption growth is questioned due to welfare measurement ambiguities.
- Further research is needed on the normative foundations of consumption growth policies.
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