Implications of the Theory of Consumer Behavior For Consumer Policy Research

Gerhard Scherhorn, University of Hohenheim
ABSTRACT - The purpose of this paper is to lay down three propositions on consumer problems, consumer policy and consumer policy research. First, it is argued that consumer problems are viewed too narrowly if the term is centered on buying and using consumer goods. Second, it is inferred that consumer policy should be extended to decrease consumer costs and to reveal consumer risks in the whole field of relations between the consumption and the production sector. Third, it is concluded that consumer policy research should view consumer policy needs and effects in connection not only with relations between buyers and seller but also with relations between consumption and work.
[ to cite ]:
Gerhard Scherhorn (1980) ,"Implications of the Theory of Consumer Behavior For Consumer Policy Research", in NA - Advances in Consumer Research Volume 07, eds. Jerry C. Olson, Ann Abor, MI : Association for Consumer Research, Pages: 52-55.

Advances in Consumer Research Volume 7, 1980     Pages 52-55

IMPLICATIONS OF THE THEORY OF CONSUMER BEHAVIOR FOR CONSUMER POLICY RESEARCH

Gerhard Scherhorn, University of Hohenheim

[Paper prepared for the Tenth Annual Conference of the Association for Consumer Research, San Francisco, October 26-28, 1979.]

ABSTRACT -

The purpose of this paper is to lay down three propositions on consumer problems, consumer policy and consumer policy research. First, it is argued that consumer problems are viewed too narrowly if the term is centered on buying and using consumer goods. Second, it is inferred that consumer policy should be extended to decrease consumer costs and to reveal consumer risks in the whole field of relations between the consumption and the production sector. Third, it is concluded that consumer policy research should view consumer policy needs and effects in connection not only with relations between buyers and seller but also with relations between consumption and work.

CONSUMER PROBLEMS

Concerning my first proposition, I do not pretend the proposed understanding of consumer behavior is a new one. Authors like Becker (1965), Lancaster (1966) and Linder (1970) have contended that, in Maynes' words, it is not goods but activities that give rise to utility. "The household is a 'firm' that combines such inputs as the time of household members, their skills, their durable goods, their money to produce activities that in turn yield utility" (Maynes 1976, p. 15). Judging from the practice of consumer research, however, one could not tell that this view guided the perception of problems worth being studied. Consumer research apparently continues to concentrate on buying decisions. Any survey of studies on consumer affairs, consumer behavior, consumer complaints, consumer dissatisfaction, consumer disadvantages and the like shows that consumer researchers must be chiefly interested in spending and borrowing, saving and investing behavior.

This is easily explained when we assume that consumer research is guided by the market paradigm according to which the consumer is viewed first and foremost in the role of a demander in the market place. In my judgment this is too narrow a view, when a proper understanding of consumer problems is at stake. Let me try to set against it a somewhat broader approach.

Suppose we aggregate all professional activities in private firms and public authorities that are done for rewards which approximate individual alternative costs. Suppose we do not identify this aggregate with "the economy", as macroeconomics does; instead we may call it the "production sector" of the economy. Suppose further that we place beside this aggregate another one including all those activities that are done without such rewards. Though there may be some monetary grants, none of these activities are rewarded by an income comparable to those paid in the production sector. We can call this aggregate the "consumption sector". Using the market paradigm, we would have to define consumption as the consumers goods export ,from the production to the consumption sector.

Within the consumption sector, however, imported goods play a surely important but not absolutely dominating role. Only few goods are consumed directly. The great majority of goods serve to mediate consumer activities like housekeeping and do-it-yourself work, buying and investing, educating and learning, neighborhood services and community work, recreational activities and entertaining pursuit. In part those activities are avocational, in part they are full-time jobs. Some of them are very near to ultimate consumption, others are not. So it is not buying of satisfying goods alone, not even satisfying consumption alone that consumers are interested in. Generally speaking the object of consumer interest is effective, satisfying, useful activities in the consumption sector.

Comparing the activities which constitute the consumption sector with those constituting the production sector we find at least three aspects worth studying. One is the aspect of substitution. There seem to be only limited possibilities of transforming activities of one sector into those of the other. Certainly there is a tendency in the consumption sector to substitute consumer activities by goods or services obtained from the production sector. But there is an opposite and seemingly compensating tendency in the production sector to raise productivity by pushing jobs off on consumers, for instance self-service and do-it-yourself repair. Certainly there has been a process of substituting activities of the consumption sector by activities of the production sector. But this substitution did not result in an erosion of the consumption sector. It has reduced the average size of family households but rather enlarged the average quantity of activities per household member. It gave rise not only to the before mentioned producer tendency to push jobs off on consumers but also to a consumer tendency to generate and adopt new activities, ranging from leisure pursuit to self production of, for instance, food or energy.

I am now going to discuss four sources of consumer problems that can be derived from the analysis of the relations between the two sectors. I describe these four sources as displacement, discrimination, assimilation and adaptation.

As far as the substitution aspect is concerned, consumption problems arise from the displacement of consumption activities by other activities within the consumption sector which are more productive (Linder 1970) or more stimulating (Scitovsky 1976) or more comfortable (Winn 1977). The preferred activity may be in full accordance with consumers' perceived wants, and nevertheless the displaced activity may be of a kind that cannot be omitted without any negative consequences say, for consumers' health or for family integration.

While some consumer activities can be substituted by producer activities (and vice versa), the consumption sector as a whole does not seem to be substitutable. In other words, consumer activities must to a certain degree be complementary to producer activities. This is the second aspect of relations between the production and the consumption sector I would like to address. Certain consumer activities are satisfactory only when performed by the consumer himself. Others could principally be taken over by the production sector, but only at higher opportunity costs. Opportunity or alternative costs in the consumption sector are very often lower than those which would have to be covered if consumer activities were transformed into producer activities. In most cases the cost advantage can be traced back to differences in taxation, differences in working conditions and job satisfaction and differences in qualification requirements between the two sectors.

The difference of opportunity costs is needed for maintaining low productive activities in the consumption sector which seem to be necessary or important for consumers' satisfaction. According to Linder's hypothesis there certainly may be a tendency to raise consumer productivity when producer productivity increases. But due to the opportunity cost advantage of the consumption sector the difference between the productivity levels of the two sectors need not be diminished. On the other hand, the complementary relation between the two sectors can be disturbed, and such disturbance may well cause consumer problems. I want to distinguish two cases of disturbance, which I would like to call discrimination and assimilation.

One cannot deny that consumer activities are subject to discrimination. There is no equality of status between those working professionally in the production and in the consumption sector. There is no adequate training of skills required in buying or housekeeping or educating one's own children. There is no strong support for those aiming at self production of goods or at being supplied with long-life goods. Conditions of work in the consumption sector, especially with regard to the satisfaction of what Alderfer calls relatedness needs (Scherf 1977), are sometimes worse than in the production sector. In short, producer activities enjoy much higher esteem than consumer activities. The result can be that the willingness to perform activities in the consumption sector declines. This in turn can force producers to protect their jobs against immigrants from the consumption sector. Thus, discrimination clearly contributes to the causes of consumer dissatisfaction.

Another source of consumer problems is indicated by the term assimilation. One often observes that people assimilate their consumer behavior to the kind of activity they are accustomed to by working in the production sector. They transfer achievement norms to leisure pursuits. They transfer to consumer activity their reaction to monotonous work, stupefaction. They transfer status seeking, competition, and productivity increases. Here, too, can exist a source of frustration for consumers, provided they feel that there are chances in the art of living they fail to take.

As a third aspect of consumer-producer relations I should mention the familiar issue of buying consumer goods from the production sector. In this respect, relations are or should be reciprocal. Consumer problems arise when they deviate from the principle of reciprocity. Consumer expectations with regard to product performance seem to grow exponentially with the level of affluence (Thorelli & Thorelli 1977). On the other side products and services often fail to match even simpler performance expectations. Products reveal unexpected costs, e.g., repairs, and negative second order effects such as damages to health. In general consumer dissatisfaction with goods and services means unforeseen buying risks or uncovered opportunity costs, due to the growing distance between the two sectors (Maynes 1979).

Again it proves useful to proceed from the concept of sector relations in the search for the causes of consumer problems. As far as the supply and demand of consumer goods is concerned, there is a division of labor between the production and the consumption sector which can be characterized with reference to the political theory of democracy (Dahl & Lindblom 1953). Principally, producer decisions with respect to consumer goods can be viewed as leadership decisions. These are to be controlled by consumers using the various means of exit and voice (Hirschman 1970) to bring their wants to bear. Inevitably there will always be occasions for some consumers to be dissatisfied with the treatment of their individual wants. Widespread and growing dissatisfaction, however, should be regarded as indicating that the reciprocity of sector relations must be disturbed to some degree.

Such disturbance occurs when prerequisites and means of exit and voice are withheld from consumers. Information may not be at consumers' disposal, or only at unbearable costs. Information given may be biased or deceptive. The market position of suppliers may be strong enough to abuse it by rigid treatment of consumers' wants with respect to price, quality, or service. Complaining may be rendered difficult. Communication media may not be easily accessible for consumer criticism on producers. Institutions to represent and defend consumer interests may be not sufficiently effective. Legal rules such as the right of cancellation may be missing.

This leads to the fourth source of consumer problems I would like to discuss: adaptation. Deviations from reciprocity can be interpreted as results of the endeavor of adapting consumer behavior to producer interests. Consumer behavior is adapted not only to the interests of producers of private consumer goods but just as well to those of the producers of public goods (Young 1978). Subject to adaptation are not only the disadvantaged consumers (Williams 1977) but also average consumers (Thorelli, Becker & Engledow 1975). Objects of adaptation are the control activities of consumers. The effect of adaptation is that such activities do not take place nor that they are of low intensity, because risks are unknown or costs are too high. The result will be consumer dissatisfaction, though not necessarily in each case.

At this point I can sum up my first proposition in three sentences. Using the market approach we get to one certainly very important source of consumer problems which I have described as an adaptation of consumer behavior to producer interests. Using the sector approach employ here we learn that there are several sources of consumer problems, some of them outside the marketplace. My suggestion is that we should not neglect the latter.

CONSUMER POLICY

My second proposition deals with the implications for consumer policy. Using the terms introduced before we can say that consumer policy must not be limited to guarding the consumption sector's frontier in order to prevent any encroachment out of the production sector. More generally, consumer policy should be aimed at balancing the relations between the two sectors. From the analysis of these relations I derived four sources of consumer problems:

- displacement of consumer activities, which cannot be omitted without negative consequences for consumers themselves,

- assimilation of consumer behavior to the kind of activity men are trained to adopt in the production sector,

- discrimination of consumer activities compared to activities in the production sector,

- adaptation of consumer behavior to producer interests by keeping from the consumption sector means of maintaining the consumer interest.

Consumer policy should be aimed at all four sources of consumer problems instead of concentrating only on the last one, namely, adaptation to producer interests. A policy determined only to counterbalance consumer adaptation has to focus its endeavors on regulation and information enabling consumers to perceive and maintain their interest concerning consumer goods exchange. To put it in a nutshell these measures must decrease consumers' opportunity cost of information seeking, decision making, resisting, criticizing, complaining, and protesting; and they must increase consumer information on the remaining risks connected with buying and using goods obtained from the production sector.

A policy determined to balance the entire relationship between the consumption and the production sector, however, should decrease costs and should reveal risks of consumer activities not only with a view to prevent adaptation. I stated before that the consumption sector needs an opportunity cost advance in order to balance the productivity lag necessary for maintaining less productive consumer activities. That cost advantage is heavily affected by disturbances in the reciprocal relations. It is seriously endangered with respect to complementary relations. Here it is especially the discrimination of consumer activities that increases opportunity costs, enforcing a tendency to go over to the production sector and to replace consumer activities either by more productive consumer activities or by producer activities which may bring about negative secondary effects. Last but not least even the tendency of assimilation may be reinforced when relative costs of consumer activities are high.

In my judgment it is not conclusive that consumer policy should be confined to consumer-producer relations concerning consumer goods. The premises I rely on in this paper lead to another conclusion. First, it is not goods but activities that give rise to utility. Second, it is not activities connected with consumer goods alone but activities in the whole consumption sector that give rise to consumer problems. Third, consumer problems are not to be solved by consumers alone because they originate in the relations between consumers and producers. Fourth, economic policy as hitherto established has not been very effective in solving consumer problems. Thus, it is to be concluded that a specific consumer policy is needed which has to be devoted to solving consumer problems in the entire field of relations between the consumption and the production sector.

Two subgoals of consumer policy can be derived from the analysis of those relations, namely, decreasing consumer costs and revealing consumer risks. That low opportunity costs are necessary for the workability of the consumption sector I have already tried to demonstrate. That risks are connected with buying consumer goods is a very familiar issue in consumer research. In a current research project we are transferring this approach to consumer policy (Grunert 1979). Risks are likewise implied in consumer activities other than buying. I refer especially to the negative consequences involved in the displacement of consumer activities. Those consequences can be treated as risks, and an elementary task of consumer policy seems to be creating risk-consciousness in this respect. The same holds for the negative consequences that may occur when consumer behavior is assimilated to the kind of activity for the production sector. Even consumer discrimination can be seen as a result of risks principally avoidable, though in most cases not by individual efforts alone. A good deal of consumer discrimination emanates within families, and family norms and habits can be changed.

CONSUMER POLICY RESEARCH

In my third proposition I want to make certain suggestions regarding research. Contemporary consumer research seems to be divided into three branches, namely marketing research, household research and research on consumer policy needs and effects which we can designate as consumer action research (+lander & Lindhoff 1975; +lander 1978) or consumer policy research. The field to which consumer policy research should be devoted can be described only partly in terms of the grants economy (Boulding 1966). For it is nonmonetary relations rather than unilateral transfers that can be useful as a guideline for consumer policy.

As I have tried to set out, consumer policy needs arise from consumer problems, and consumer problems can be viewed as originating in disturbed relations between the consumption and the production sector. Consumer policy effects then can be measured by the degree to which the disturbance (e.g., adaptation, assimilation, discrimination or displacement) has been reduced. If, for instance, consumer information is used to reduce consumer adaptation, its effectiveness should not be measured by concepts like impact or acceptance alone but by the degree of self-determination of consumer wants observed before and after the information has been given (Scherhorn & Wieken 1972).

Using the frame of reference suggested here would enable us to view consumer policy needs in unusual but possibly relevant connections. In adapting consumer behavior to producer interests, for example, producers may be successful especially because discrimination of consumer activities has already made consumers disposed to being adapted to producer interests. To add another example, consumer information is needed not only to prevent a consumer from a bad buy, provided he has already decided upon what category of product he wants. Consumer information is also needed to help the consumer to reflect upon his own wants which can be the result not only of adaptation but also of assimilation or of displacement. Supposing somebody wants a television set for his five year old son. We do not feel entitled to call in question that want itself. But we may feel permitted to instruct the consumer on negative secondary effects television apparently has on children (Winn 1977). This certainly would require consumer policy research to extend its view from the effects of television commercials to the effects of watching television in general. In other words, we would have to scrutinize the effects of consumer activities beyond those of consumer goods and producer activities.

The most important of those connections that we should pay more attention to is the one between consumption and work. Applying the market approach to consumer problems we conceivably tend to neglect this connection because we then view the consumer as a demander of goods, at most as a supplier of working capacity, but not as a person exposed to the conditions of the production sector, e.g., working conditions, as well as to those of the consumption sector. Maybe the sector approach proposed here would help consumer research to allow for this connection because it suggests scrutinizing not only reciprocal but also complementary relations between the consumption and the production sector, and taking into account that consumer problems could as well originate in a disturbance of complementary relations. The term complementary is employed to indicate that there are activities in the consumption sector which cannot be substituted by activities in the production sector. Problems arise when those activities are either eliminated or modified, whether by displacement, discrimination or assimilation. In these cases it is the resulting disproportion between the spheres of work and consumption that requires policy measures. Consumer policy may not be sufficient to solve those problems. But without consumer policy they may not be soluble at all.

REFERENCES

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