Summary
The author criticizes economists for their uncritical acceptance of consumers’ revealed preference and tries to explain the preferences manifest in the United States by tracing them to cultural influences, especially the Puritan Ethic, and to economic factors, such as producers’ domination and economies of scale. Differences between American and European behavior patterns are sought mainly in comparative time budgets and Hawtrey’s distinction between defensive and creative consumption is revived as a framework suitable for such analysis.
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Cf. Bernard Mandeville,The Fable of the Bees, or Private Vices, Publick Benefits, 1714. Mandeville’s argument, which is the basis also of the Marxist theory of imperialism, gained respectability and universal recognition only after the publication, in 1936, of J. M. Keynes’The General Theory of Employment. Interest and Money.
Cf. Wesley C. Mitchell, ‘The Backward Art of Spending Money’,American Economic Review, II (1912), pp. 269–81 It must be noted, however, that Mitchell’s explanation of why this art is backward is very different from ours.
Cf. N. Kaldor, ‘The Economic Aspects of Advertising’,Review of Economic Studies, XVIII (1951), pp. 1–27 esp. p. 16.
Advertising expenditure, in relation to the gross national product, is 2.2 per cent in the United States (early 1960’s), 1.8 per cent in Great Britain (1960), 1.5 per cent in Canada (1964),. 9 per cent in West Germany and the Netherlands (1957), and .7 per cent or slightly less in France, Belgium and Italy (1957). Source:Statistical Abstract of the United States, 1968; B.B. Elliott,A History of English Advertising, Business Publications, London, 1962, p. 207; Dominion Bureau of Statistics,Advertising Expenditures in Canada 1964, p. 6; H. A. Münster,Werben und Verkaufen im Gemeinsamen Europäischen Markt, Leske, Darmstadt, 1960, pp. 107–20.
On the origin of set prices, see R. M. Hower,History of Macy’s of New York, 1858–1919, Harvard University Press, Cambridge, Mass., 1942, Chapter 4.
Cf. H. Black,Buy Now, Pay Later, Morrow, New York, 1961; D. Caplovitz,The Poor Pay More, Free Press, Glencoe, Ill., 1963; S. K. Margolius,The Innocent Consumer v. the Exploiters, Trident Press, N.Y., 1967.
Imagine a commodity profitable to produce in a quantity of 100,000 units or more at a price at which consumers’ demand in the U.S. would be 200,000; that is, 1 unit per 1,000 inhabitants. Clearly, if all consumers could make their demand effective, their demand would be filled. But if they were evenly spread over the country, then the demand in communities with less than 100,000 inhabitants would be less than 100 units, which may well be insufficient for local retailers to stock the commodity. With 71.3 per cent of the U.S. population living in such communities, sales would be reduced to below 100,000 units and production rendered unprofitable if the commodity were marketed only in the larger communities and less than 30 per cent of the potential customers in the smaller communities had the opportunity and initiative to shop for this item in the next larger town.
A taste for variety (in contrast to a variety of tastes) can often be satisfied by superficial differences in the product, which can be provided without restricting the market and without sacrificing economies of scale.
The data on sales come fromAutomobile Facts and Figures, 1949, 1959 and 1969 editions; those on car lengths are unweighted averages based on data fromConsumer Reports, February 1938, May 1948, September 1958, April 1960, January, April and July 1969.
Cf. P. O. Steiner, ‘Program Patterns and Preferences, and the Workability of Competition in Radio Broadcasting’,Quarterly Journal of Economics, LXVI (1952), pp. 194–223, for a rigorous analysis of the question whether competition caters to a variety of tastes or merely duplicates the same product.
Even more important is the pressure firms put on their executive staffs and salesmen to help support the image the firm wants to create with their personal appearance and way of living.
These concepts were introduced by Sir Ralph Hawtrey, in hisThe Economic Problem, Longmans, London, 1925, See especially Chs. 17 and 18.
Cf. G. S. Morgan, ‘The Puritan Ethic and the American Revolution,’William and Mary Quarterly, 3rd Ser. XXIV (1967), pp. 3–43.
Approximately one-half of the beef consumed in the United States is in the form of hamburger. Frankfurters would add another sizeable proportion but they take some chewing.
Cf. S. Giedion,Mechanization Takes Command, Oxford University Press, New York, 1948, p. 204.
—Ibid.,S. Giedion,Mechanization Takes Command, Oxford University Press, New York, 1948, p. 198.
Cf. ‘Recherche Comparative Internationale sur les Budgets Temps’,Etudes et Conjoncture, September 1966, Table III.1.
A promising beginning has been made, however, by ski lifts, snowmobiles, electric golf carts, all-electric bowling alleys, power driven exercycles, and battery-powered effortless exercizors.
Active sports, which include hiking and walking, average 6 minutes a day in the United States, over 19 minutes in Europe.Cf. ‘Recherche Comparative Internationale sur les Budgets Temps’, Table III.1.
Cf. G. Hutton,We Too Can Prosper, Allen & Unwin, London, 1953, for an account of the experience of the British productivity teams in America.
Sales of do-it-yourself equipment and materials were 2 per cent of the U.S. national income and equal to almost one-half of non-farm residential construction already by 1953. Cf. ‘Summary of Information on the Do-It-Yourself Market’,Business Service Bulletin, LXXXIV (1954), U.S. Department of Commerce.
See Sales of do-it-yourself equipment and materials were 2 per cent of the U.S. national income and equal to almost one-half of non-farm residential construction already by 1953. Cf. ‘Summary of Information on the Do-It-Yourself Market’,Business Service Bulletin, LXXXIV (1954), p. 20 above for the time we spend over meals. U.S. Department of Commerce.
Cf. R. O. Cummings,The American and His Food, University of Chicago Press, 1940, for plenty of evidence on this.
Cf. ‘Recherche Comparative Internationale sur les Budgets Temps’, Table III.1.
Cf. Ibid.,‘Recherche Comparative Internationale sur les Budgets Temps’, Table V.1.
The poorest 10 per cent of our population get a smaller share of our larger total than do the poorest 10 per cent of most Western European nations—the data are not good and detailed enough to show how the standards of living of the poorest 10 per cent rank.
Cf. Juanita M. Kreps,Lifetime Allocation of Work and Income, Duke University Press, Durham, N.C., 1971, Ch. 5.
They are also more prone to premature heart attacks; but this is beside the point. It merely indicates that consciously or subconsciously they set the enjoyment of life ahead of its mere prolongation, which is a legitimate and not irrational preference.
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These notes constitute an early version of what has since become a much more ambitious work with a more analytical approach, trying to use behavioral psychology to fill in gaps in the economist’s understanding of consumer behavior, and to be published as a book.
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Scitovsky, T. Notes on the producer society. De Economist 121, 225–250 (1973). https://doi.org/10.1007/BF02367126
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DOI: https://doi.org/10.1007/BF02367126