Consumption (economics)
Empirical methods Prescriptive and policy Consumption refers to the use of resources to fulfill present needs and desires.
[2] Consumption is a major concept in economics and is also studied in many other social sciences.
According to mainstream economists, only the final purchase of newly produced goods and services by individuals for immediate use constitutes consumption, while other types of expenditure — in particular, fixed investment, intermediate consumption, and government spending — are placed in separate categories (see consumer choice).
Other economists define consumption much more broadly, as the aggregate of all economic activity that does not entail the design, production and marketing of goods and services (e.g., the selection, adoption, use, disposal and recycling of goods and services).
A similar realist structural view can be found in consumption theory, which views the Fisherian intertemporal choice framework as the real structure of the consumption function.
In addition, bounded willpower refers to the fact that people often take actions that they know are in conflict with their long-term interests.
[9][10] The elasticity of demand for consumption goods is also a function of who performs chores in households and how their spouses compensate them for opportunity costs of home production.
According to mainstream economists, only the final purchase of goods and services by individuals constitutes consumption, while other types of expenditure — in particular, fixed investment, intermediate consumption, and government spending — are placed in separate categories (See consumer choice).
Other economists define consumption much more broadly, as the aggregate of all economic activity that does not entail the design, production and marketing of goods and services (e.g., the selection, adoption, use, disposal and recycling of goods and services).
[16] A special case of this is the consumption-leisure model where a consumer chooses between a combination of leisure and working time, which is represented by income.
[17] However, behavioural economics shows that consumers do not behave rationally and they are influenced by factors other than their utility from the given good.
[18][19] In macroeconomics in the theory of national accounts consumption is not only the amount of money that is spent by households on goods and services from companies, but also the expenditures of government that are meant to provide things for citizens they would have to buy themselves otherwise.
Consumption of electric energy is positively correlated with economical growth.
Electric energy is needed to produce goods and to provide services to consumers.
There is a statistically significant effect of electrical energy consumption and economic growth that is positive.
But as countries continue to develop this effect is decreasing as they optimize their production, by getting more energy-efficient equipment.
Or by transferring parts of their production to foreign nations where the cost of electrical energy is smaller.
The main factors affecting consumption studied by economists include: Income: Economists consider the income level to be the most crucial factor affecting consumption.
These factors can affect consumption; if the mentioned assets are sufficiently liquid, they will remain in reserve and can be used in emergencies.
As a result, it can lead to more consumption expenditure compared to the case that the only purchasing power is current income.
On the other hand, society's culture has a significant impact on shaping the tastes of consumers.
Consumption theories began with John Maynard Keynes in 1936 and were developed by economists such as Friedman, Dusenbery, and Modigliani.
The relationship between consumption and income was a crucial concept in macroeconomic analysis for a long time.
[28] The permanent income hypothesis was developed by Milton Friedman in the 1950s in his book A theory of the Consumption Function.
changes (for example as a result of winning the lottery), then this increase in income is distributed over the remaining lifespan.
is the average wage the individual will be paid over his or her remaining work time And
[29] The term "access-based consumption" refers to the increasing extent to which people seek the experience of temporarily accessing goods rather than owning them, thus there are opportunities for a "sharing economy" to develop, although Bardhi and Eckhardt outline differences between "access" and "sharing".
[30] Social theorist Jeremy Rifkin put forward the idea in his 2000 publication The Age of Access.
[31] Spending the Kids' Inheritance (originally the title of a book on the subject by Annie Hulley) and the acronyms SKI and SKI'ing refer to the growing number of older people in Western society spending their money on travel, cars and property, in contrast to previous generations who tended to leave that money to their children.
And about one in ten unmarried Americans (14 percent) plan to spend their retirement money to improve their lives, rather than saving it to leave an inheritance to their children.
