Fine – Economics and the consumption literature

Can economic theory alone be used to analyse real world economic activity such as the consumption of goods and services? Some would argue that it is important to understand the nature of the specific good or service, how and why demand exists or is created, what shapes preferences, and what are the cultural, institutional and other contexts in which this activity take place.

Marketing books on consumer behaviour place little weight on the neoclassical model of the utility maximising individual. Instead, they have a wide range of alternative theories of consumer behaviour which take into account external influences such as the sociocultural environment, firms’ marketing strategies, and psychological and organisational aspects of decision making (Schiffman et al., 2008).

This commentary draws on the introductory chapter of Fine (2002). In this book Ben Fine aims to blend the economic and the cultural dimensions of consumption, drawing on the broad range of literature across several disciplines. In doing so, he identifies problems with the isolationist stance of mainstream consumer theory. Here are a few brief extracts:

“…rational choice methodologies, or those more generally based on methodological individualism, have made remarkably little headway in the literature on consumption” (Fine, 2002, p. 3)

“…mainstream economics remains empty when it comes to the meaning of the consumed to the consumer (and, indeed, treats the consumer much like a mini-enterprise with utility as its sole product.” (Fine, 2002, p. 4)

Conversely, “…the study of consumption took the popular notions of consumer society or consumerism as an initial analytical prompt” (Fine, 2002, p. 4). Two approaches were taken, seeing the development either as a step in a historical process or as a phenomenon meriting ethical consideration – is it a good or bad development?

Moreover:

“…with the major exception of economics, the study of consumption has been highly conducive to interdisciplinarity…[with] genuine fertilisation across disciplines in appropriate recognition that the subject of consumption knows no analytical boundaries. The exceptional exclusion of economics is paradoxical. For it reflects both the authority and impenetrability of the discipline – to other social sciences and as it presents itself, it is technically formidable – and the narrowness of the analytical terrain upon which it exercises its command.” (Fine, 2002, pp. pp.4-5)

Fine argues that economic aspects are important for an understanding of consumption, but there are clear problems in any attempt to incorporate mainstream economics into this wider analysis. “”While mainstream economics is appropriately set aside as being incapable of providing that material, let alone the cultural, element, a political economy of capitalism is essential.” (Fine, 2002, p. 5)

The mainstream economics approach to consumer behaviour is important if only because of the influence it has had on perceptions and policy making. However, there is a wealth of alternative literature which offers insights into a richer, more nuanced understanding of the nature and implications of the activities related to consumption.

 

 

Fine, B. (2002). The world of consumption : the material and cultural revisited (2nd ed.). London ; New York: Routledge.

Schiffman, L., Bednall, D., O’Cass, A., Paladino, A., Ward, S., & Kanuk, L. (2008). Consumer behaviour (4th [Australian] ed.). Frenchs Forest, N.S.W.: Pearson Education Australia.

Commentary added, 8th November 2014