Can Economics Help to Understand, and Change, Consumption Behaviour?

Abstract

This chapter assesses the contribution that economics can make to help us understand consumer behaviour and, if necessary, to try and change it. Economic theory of consumer behaviour is sophisticated and rigorous, but very limited. It excludes from consideration many of the factors which are well-recognised by other social sciences as being important. These limitations stem largely from the standard model of homo economicus. Economists are not unaware of this problem, but it is difficult to resolve it: to establish models that are tractable—for example incorporating the idea of interdependent preferences. But even simple economic theory, in which income and price are the main explanatory factors of consumer behaviour, provides the basis for potentially very effective policy instruments. If incomes fall, consumption is indeed reduced; and taxes and subsidies can substantially alter consumer behaviour. The problem is that such instruments are politically very unpopular.

Empowering Responsible Consumers Through Ta’awun (Mutual Cooperation) for Sustainability

“…First and foremost is to save money. A responsible consumer who is very careful and responsible about consumption could save money in the long run by avoiding overspending and buying only what is necessary (Abdul Razak, 2021;Huang & Rust, 2011;McNeill, 2023). In addition, a responsible consumer can have to protect limited and precious resources (Jalil et al, 2020;Warde, 2015).…”

“…Subsequently, a responsible consumer could enjoy a good and healthy life by eating healthy foods, quitting smoking, and exercising regularly are not only improving physical health but also mental wellbeing (Balaji et al, 2022;McNeill, 2023;Venkatesan et al, 2022;Webb et al, 2008). Thus, responsible consumers would make a difference in their livelihood when every time a consumer buys something or makes an economic decision, each of them has the power to support companies with ethical practices or those that use sustainable materials and production methods to reduce their environmental footprint (McNeill, 2023;Tsen, 2021;Venkatesan et al, 2022). In the long run, responsible consumption promotes economic equality by supporting small businesses and local producers, who often rely on fair trade practices to ensure that all workers are treated fairly and compensated adequately for their work (Balaji et al, 2022;Jalil et al, 2020;Webb et al, 2008).…”

“…Consumer affairs authorities in the governments can create regulations that encourage responsible consumption by setting limits on the amount, type, and quality of products or services consumed (Balaji et al, 2022;McNeill, 2023;Venkatesan et al, 2022;Webb et al, 2008). This could include laws to regulate the production, sale, and use of certain goods or services.…”

“…These campaigns can help individuals understand how their choices affect the environment around them so they can make more informed decisions when it comes to their purchasing habits (Abdul Razak, 2021;Blum et al, 2021;Frenken, 2017;McNeill, 2023;Tsen, 2021). A policy not only educates citizens but also reinforces good behavior by providing incentives for responsible consumption to responsible consumer citizens.…”

“…This https://doi.org/10. 15405/epsbs.2024.05.8 Corresponding Author: Suhaimi Mhd Sarif Selection and peer-review under responsibility of the Organizing Committee of the conference eISSN: 2357-1330 could include tax breaks, subsidies, or other financial incentives (Abdul Razak, 2021;McNeill, 2023). In addition, a policy should also support sustainable consumption practices via funding and resources to help businesses develop sustainable consumption practices such as using renewable energy sources or adopting green technologies.…”