Academic journal article Journal of Economic Issues

Consumed in Theory: Alternative Perspectives on the Economics of Consumption

Academic journal article Journal of Economic Issues

Consumed in Theory: Alternative Perspectives on the Economics of Consumption

Article excerpt

In many disciplines, the study of consumption has become a dynamic, changing field. A new interdisciplinary area of research on consumption has emerged in the last 10-15 years, drawing contributions and participants from sociology, anthropology, history, philosophy, literature, and marketing - even, on occasion, from economics. (See Miller [1995] for a collection of bibliographic essays and surveys from each of the relevant disciplines.) Yet despite the central role that consumption plays in economic theory, economics has been one of the least important contributors to the new wave of research - and one of the disciplines least affected by new approaches to consumption of any variety. A recent review of innovations in neoclassical economic theory simply asserts that "the microeconomic theory of consumer choice under conditions of certainty is well developed, and has not been the subject of any significant advances in recent years" [Darnell 1992].

Economists' lack of interest in new approaches to consumption largely reflects the rigidity of the conventional economic theory of consumer behavior. That theory, of course, assumes that consumers come to-the market with well-defined, insatiable desires for private goods and services; those desires are not affected by social interactions, culture, economic institutions, or the consumption choices or well-being of others. Only prices, incomes, and personal tastes affect consumption - and since tastes are exogenous to neoclassical economics, there is little point in talking about anything but prices and incomes.

The correspondence between this theory and the visible facts of economic life is tenuous at best. If there have been no recent advances in the microeconomics of consumer behavior, it is not because of a lack of room for improvement. Nor has there been any scarcity of good critiques and suggestions of alternative theories in the economics literature. The problem is that the alternatives have been too quickly fragmented and/or forgotten.

This article reviews the history of dissenting economic perspectives on consumption and argues that the perspectives provide ample material for the construction of an alternative - especially if the dissenting views are combined into a comprehensive new theory. However, the academic development of alternatives has often gone in the opposite direction, toward narrow, single-issue models. Viewed in isolation, such fragmentary alternatives have little power to transform economic thinking; the best-known one, Gary Becker's implausible extension of the standard analysis of consumer choice, appears to reinforce much of what is wrong with neoclassical theory. A synthesis of the various available critiques would have a very different meaning. (For a broader survey of the frontiers of the economics of consumer behavior, see Goodwin, Ackerman, and Kiron [1997].)

To present the alternative theories, it will be helpful to outline three fundamental assumptions of the neoclassical theory of consumption; these assumptions may be called asocial individualism, insatiability, and commodity orientation:

1. Asocial individualism. Consumer desires and preferences are exogenous; they are not affected by social or economic institutions, interactions with others, or observation of the behavior of others.

2. Insatiability. It is human nature to have a multiplicity of insatiable material desires; the only economically meaningful forms of individual satisfaction result from more consumption (or less work, a related point that will not be addressed here).

3. Commodity orientation. Consumer preferences consist of well-informed desires for specific goods and services available on the market.

The three assumptions are closely related; any comprehensive critique of neoclassical theory will include alternatives to all three. Veblen, for example, is famous for his alternative to the asocial individualism assumption - but he also mocked the hedonistic conception of a person as a "homogeneous globule of desire," arguing that far from an insatiable desire for pleasure, human nature is "a coherent structure of propensities and habits which seeks realization and expression in an unfolding activity" [Veblen 1948]. …

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