Material needs and aggregate demand

Abstract

A central conclusion of the standard theory of consumption is that consumers' preferences can be taken as theoretical primitives. Special categories of consumption, such as "basic needs", or of goods, such as "subsistence goods" are seen as extra theoretical baggage that add few, if any, insights. This theoretical orientation has been absorbed into the theory of aggregate demand, but the aggregate theory has a serious problem that is not shared by the individual-level theory: no matter how well-behaved the individual-level demand functions may be, the aggregate-level function can take on almost any form. This result follows from the SMD theorem, named after Sonnenschein, Mantel, and Debreu, who developed the theory; Kirman and Koch strengthened the results, and the SMD-KK theorem poses a fundamental challenge to models linking micro and macroeconomics. A standard response to the aggregation problem is to introduce a representative agent, but this merely sidesteps the problem. We argue that the aggregation problem arises, in part, because of the exclusion of needs from the theory. Specifically, we argue that material needs-such as basic needs for energy, water, food, and shelter-must be included as theoretical primitives because both the needs and the satisfiers of those needs are universal. We construct a microeconomic model with material needs and show that the form of the aggregate excess demand function is not completely arbitrary, so the SMD-KK theorem does not apply. We discuss the implications of this result.

The Learning Economy Regime

“…Principles 2 to 5 are explicitly included in the model. Taken together, they suggest that income effects are more significant than substitution effects and that substitution only takes place within broad classes of goods (Kemp-Benedict, 2013). Principles 1 (economic agents have designed rules and procedures that allow them to reach decisions quickly and efficiently in an environment of imperfect knowledge) and 6 (the consumption of others influences one's own consumption) are implied by the model.…”

Sur l’analyse microéconomique de la hiérarchie des besoins dans l’économie d’Ancien Régime

“…Certaines variantes sophistiquées des préférences lexicographiques sont présentées dans l'annexe de l'article de Drakopoulos et Karayiannis. 5 À titre d'exemple, on peut citer l'article deKemp-Benedict (2013). Évidemment, on peut toujours considérer que les besoins ressentis par les individus sont en réalité le résultat de conditionnements sociaux(Trigg, 2004).…”

“Quantum Satis”: Una Propuesta Conceptual y Operativa Para Educar en el Consumo Sostenible. Teoría y práctica a partir de un estudio de caso

“…Se ha observado que el consumo de otras personas influye el consumo personal, y que la proximidad geográfica o la pertinencia a un mismo grupo puede generar cestas similares de consumo (Kempt-Benedict, 2013). A partir de medir la visibilidad del consumo como una característica sociocultural de los productos y determinada por el contexto sociocultural en el que se consumen, la investigación de Heffetz (2011) proporciona indicios de que el consumo del hogar está orientado no sólo por su valor intrínseco sino también por su valor como marcador del estatus social.…”

“…Por otra parte, aunque la multidimensionalidad humana y la variabilidad del peso de las necesidades estuvieron presentes en el imaginario del grupo desde la fase conceptual, este no logró un consenso en lo que respecta al significado de las necesidades. Estos desacuerdos tienen raíces, en parte, en una concepción jerárquica de las necesidades alineada con el modelo dominante de consumo (Kempt Benedict, 2013). Esta imagen jerárquica evidencia la tendencia de la comunidad participante de reducir la esfera del consumo sostenible al consumo funcional y de identificar el consumo simbólico con sus significados negativos.…”