What is more important in case of consumption: Current income or expectations? (PDF)

Seminar paper from the year 2014 in the subject Sociology - Consumption and Advertising, , language: English, abstract: The main goal of this paper will be to determine which of the two is more important in case of consumption. First of all, a theoretical analysis of the possible explanations of each relationship based on the existing literature will be presented. Then the research will proceed to the empirical tests (correlation and regression using SPSS Statistics software) of a created model based on consumption, gross national income as well as length of retirement in the United States and the United Kingdom over the period of 46 years. The piece will finalise with some general conclusions that can be drawn from the conducted research.

Consumer behaviour is a subject of interest to many different players in the economy. Companies gather information on their current and potential customers to determine their selling and production strategies based on what their target customers might want, need, the timing at which to introduce new products, the prices to suit their tastes etc. Governments use the information on their citizens' spending habits to figure out what policies to implement to receive effective results and garner political support for re-election. People themselves should be acquainted with the subject of consumer behaviour to better understand and use personal spending under different political, economic and social circumstances to lead more stable lives. Because of the immense interest in the subject of consumption many efforts have been put into research to distinguish the most important factors that influence consumer behaviour and so far much of such literature has been dedicated to the influence of current income and expectations (specifically expectations about future income).