Business Economics - Consumer Behaviour
One of the key analyses under the heading "consumer behaviour" refers to the interaction between price changes and consumer demand. From introductory economics we know that a reduction in the price of X will result in an overall rise in the quantity demanded of good X. However, this rise in the quantity demanded is due to the total price effect, which can be subdivided into two separate parts, the substitution effect and the income effect.
The substitution effect refers to the extra purchase of good X now that it is, after the price fall, relatively cheaper than other substitutes in consumption. The income effect refers to the rise in real income (purchasing power) now that the price of one commodity is lower within the bundle of commodities purchased by the consumer. This extra real income can potentially be used to buy more of all commodities, including X.
Total price effect = substitution effect + income effect
In terms of rules associated with the law of demand, the substitution effect will always be negative. The income effect can be positive, zero or negative.
Textbooks should provide more detail about the theory behind consumer behaviour. Unfortunately, to find good data on the Web in this area is incredibly difficult, as they are highly commercial and therefore expensive. Organisations like Mintel and Keynote provide marketing reports based on extensive market research into consumer behaviour across all sectors. Information services or libraries should be approached to find out how to access this information either online or in hard copy. One consumer research organisation site is noted here.
Association for Consumer Research
This site includes information on consumer behaviour conferences, publications and in-depth research on consumer behaviour, together with details on a listserv mailing list and information on how to join the Association. The ACR Newsletter is also available online.
Further References
Society for Consumer Psychology
Although not an economics site, the information stored by the Society for Consumer Psychology (SCP) allows students to investigate consumer behaviour from a multi-disciplinary angle. Information includes news on conferences, the Society newsletter, lists of SCP publications and information on how to access these publications offline.
A particularly useful site is the StatBase section which contains data and information about the data across the UK.
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