Information and Consumption Efficiency: Some Introductory Comments

Loren V. Geistfeld, Purdue University
George B. Sproles, Purdue University
[ to cite ]:
Loren V. Geistfeld and George B. Sproles (1977) ,"Information and Consumption Efficiency: Some Introductory Comments", in NA - Advances in Consumer Research Volume 04, eds. William D. Perreault, Jr., Atlanta, GA : Association for Consumer Research, Pages: 281.

Advances in Consumer Research Volume 4, 1977   Page 281


Loren V. Geistfeld, Purdue University

George B. Sproles, Purdue University

The concept of efficiency is as old as economics. Generally, this concept is taken to mean (1) obtaining maximum output for some fixed level of resources, or (2) using the fewest resources possible to obtain a given level of output. In the context of consumption, efficiency refers to the consumer's success in obtaining the greatest level of consumption from a given set of resources.

Inadequate information affects the likelihood of a consumer being able to engage in efficient consumption in many ways. Some examples of this are:

1. A poor correlation between price and quality of products selected by a consumer, which arises due to the consumer's inability to assess quality when imperfect information is available.

2. Consumer sovereignty not being attained since, due to ignorance or lack of information, con- sumers do not purchase products which reflect their true needs or preferences.

3. Consumers can be sold services in excess of their worth, e.g. a consumer is sold a valve job when a tune-up would have been sufficient.

4. A lack of awareness of alternatives encourages monopolistic tendencies which results in higher prices.

Even with these few examples, it is clear that the effect of inadequate information is to preclude a consumer from deriving the maximum level of consumption from limited resources.

The issue now focuses on how one can go about identifying the sources of greatest inefficiency and methods of removing the inefficiencies. It is to this end that the papers of this special topic session are addressed.

Thorelli proposes that consumer information programs (CIP) are necessary to resolve the information problem. These, when combined with education, are a more viable solution than to go the route of governmental protection. He contends that a CIP should provide consumers with non-commercial information focused on comparative product testing, labeling and marking.

Maynes demonstrates the effect of poor information on a market. When information is poor, there will generally be a iow correlation between price and quality. However, if consumers have perfect information, they will only purchase along the perfect information frontier--the loci of points in price-quality space which reflect the lowest price for each level of quality. He notes that seller controlled information may not be a viable alternative to the information problem since (a) there is an obvious bias problem and (b) it is not concentrated, e.g. a car dealer will not generally provide information on a competing brand.

Swagler discusses the concept of consumer performance using a case study of the Liberian market. He identifies three types of markets in Liberia and shows that each requires a different and increasingly sophisticated set of consumer skills for effective market performance. Emphasis is placed on the traditional "open air" market for agricultural products and household goods. In this market consumer skills and payoffs depend on price negotiation and intuitive rather than substantive knowledge of what constitutes a "best" purchase.

Geistfeld, Sproles and Badenhop present a concept of hierarchically ordered product characteristics which consists of three levels of functionally related product characteristics. This is exemplified by the durability of a blanket, which is functionally determined by such characteristics as strength and abrasion resistance. These latter characteristics are in turn dependent on fiber content and construction of the blanket. It is argued that consumer decision making requires information on characteristics at all levels, and that effective decisions may require consumers to have the sophistication to integrate characteristics at all three levels.

In conclusion, the concept of efficiency is crucial to the analysis of consumer behavior in the market. Efficiency can be measured at two levels. First, there is market performance from a consumer's perspective, which involves analyzing how well the market operates in providing for consumers' needs and wants. Second, there is consumer performance, or how effectively the individual consumer actually operates in a given market. Any measure of consumption efficiency must include both of these concepts of performance. This is the challenge for future investigations which focus on the informational problem in consumer decision making.