A Concept of Consumer Policy

Citation:

Hans B, Thorelli (1972) ,"A Concept of Consumer Policy", in SV - Proceedings of the Third Annual Conference of the Association for Consumer Research, eds. M. Venkatesan, Chicago, IL : Association for Consumer Research, Pages: 192-200.

Proceedings of the Third Annual Conference of the Association for Consumer Research, 1972      Pages 192-200

A CONCEPT OF CONSUMER POLICY

Hans B, Thorelli, Indiana University

"Consumer policy" is a simple translation from konsumentpolitik, a term originating in highly consumer-conscious Scandinavia. On neither side of the pool has any real attempt been made to analyze what it is all about. Our objective here is to take a first step in this direction. Operationally, we may define consumer policy as measures taken to implement consumer interests. The delivery system of consumer policy comprises consumer education, consumer information and consumer protection.

Let us see where these initial statements may lead us.

The Consumer Interest and the Public Interest. The Freedom to Consume

A helpful start may be to relate the consumer interest to the public interest. [We are aware of, but not discouraged by the fact that in the end the very notion of "interest" is metaphysical. So is "marginal utility" and "quality"--but they are still indispensable concepts.] It may sound trite to say that the public interest manifests itself in what the public and/or its representatives do by way of passing (or not passing) laws, rules and regulations and taking (or not taking) decisions and actions in matters of political concern. For our purposes this is a sufficient definition, however, and volumes of political philosophy indicate that it is actually difficult to give the concept much more meaning and still retain a broad acceptance. The consumer interest, on the other hand, is perhaps most readily identified with established, or at least articulated, consumer rights. Paradoxically, the most important consumer right is hardly ever mentioned. This is the "freedom to consume," a right which is greater than and antecedent to the four consumer rights enunciated a decade ago and since quoted thousands of times around the world.

We need to do no more than contrast the freedom to consume with the public interest as manifested in laws and official action to realize that the consumer interest and the public interest are not identical. [This is even admitted by as engaged a writer as Jean Meynaud in his Les Consommateurs et le Pouvoir (Etudes de Science Politique 8, Lausanne, 1964), p. 120.] This is easily seen in a country like the USSR where consumption has been deliberately restricted for decades in favor of military and industrial development, and in rationing systems artificially restraining private consumption in western countries in World War II. [Some authorities predict that we may find ourselves saddled with governmentally imposed overall limits on individual consumption before the end of this century for ecological reasons.] It is no use protesting that "we are all consumers." Every man wears several hats and plays several roles, and by definition no single role (except perhaps that of the voter) can adequately express the public interest. Indeed, conceptually most consumers are also producers--and few have had the temerity to suggest that the producer interest is equal to the public interest.

The consumer interest, like any "special" interest, is a subset of the public interest. What is good for the consumer may not always be good for the country. Nevertheless, as it concerns everybody, the consumer interest is clearly a subset of grand importance. And to those of us who believe that inextricable links exist between political democracy and free markets the consumer interest is a matter of paramount concern.

It must be admitted, however, that to define "the consumer interest" in specific situations tends to be a task fraught with ambiguity. The fractionalization of the consumer interest begins right in the marketplace. Preferences with regard to style, quality, and price, as well as the total bundle of products desired, vary greatly among consumers of different income, age and educational grouPs and frequently even within these groups. The open market is the equilibrating mechanism among all these consumer "interests." Beyond the marketplace, some consumers are ecologically oriented in the process of consumption and the disposal of refuse while others are not, etc. Indeed, it is precisely because our role as consumers is such an all-pervasive aspect of life that the consumer interest is so differentiated. No doubt this is why it has proven impractical to bring about a unified consumer movement of major proportion in most countries. Of course, this does not mean that consumerism is doomed to be a passing fad rather than an ongoing social and political force. On the contrary, it may well grow in importance as the phenomena in which consumerism originates are likely to manifest themselves even more dramatically in the future. That is, the increasing complexity of the marketplace due to the proliferation, rapidity of change and technical intricacy of market offerings occurring in parallel with a seemingly forever widening functional distance between producer and consumer. That is, too, a revolution in consumer aspirations which--somewhat paradoxically pre-industrial and post-industrial society seem to have in common. [In the post-industrial society case we would ascribe this explosion of aspirations to a combination of educational and economic affluence paired with a secular radicalization of political life, nowhere more clearly observable than in Sweden. Cf. H. B. Thorelli, "Consumer Information Policy in Sweden--What Can Be Learned?", Journal of Marketing (January 1971), 50-55.]

CONSUMER POLICY-MAKERS

The consumer interest is in part a subset of the public interest. Thus, consumer policy is in part a subset of public policy. Government is clearly an important maker of consumer policy. It should be equally obvious it is not the only one: consumer policy is also in part a subset of private policy. Individual citizens have their own "consumer policies" as they pursue their interests in the marketplace. Of greater interest here, however, are policies affecting collective consumer interests. Makers of consumer policy in this broader sense include consumer organizations, other citizen groups, business, educational institutions and the mass media.

The appropriate roles of various policy-makers is a highly controversial topic to be given a once-over-lightly in a later section.

Typology of Consumer Policy: Information, Education and Protection

In a general sense, consumer information comprises all data about individual markets and offerings. Consumer information originates in personal experience, in commercial communications and in independent sources, notably comparative testing, informative labeling and quality certification. It is oriented to specific buying decisions. By contrast, consumer education may be thought of as "consumer civics": consumer education provides the knowledge foundation necessary to develop citizens into intelligent consumers, or at least to make their self-development into intelligent consumers possible. Thus consumer education extends all the way from conveying an understanding of how the market economy operates, of the consumer decision-making process and of consumer rights and responsibilities to such pragmatic matters as the properties of different textile fibers and dietary concerns. Consumer protection are measures (typically taken by others than the individual consumer) to safeguard consumer rights. Consumer protection ranges from competition (antitrust) policy to maintain open markets via the control of deceptive practices and the handling of consumer complaints to standards and other rules and regulations to maintain consumer health and safety.

Clearly, the distinctions between consumer information, education and protection are not hard and fast. For instance, the same information may have multiple uses. Americans will find the phrase "The Surgeon General has determined that cigarette smoking is dangerous to your health" on each and every cigarette package, That the message is intended for consumer protection is self-evident, But it could also be viewed as educational. And it could also be regarded as consumer information about any single brand you might happen to select. As regards the border area between consumer education and information we may say that the more "generic" the data are in terms of product or consumer characteristics ,fie more likely it is that consumer education is the appropriate term, and that the more specifically they are related to individual offerings (brands) or to the needs of individual consumers, the more appropriate it is to speak of consumer information.

CONSUMER RIGHTS AND CONSUMER POLICY: A SCENARIO

We would suggest that the nature and scope of consumer policy can be understood most readily by viewing it in the context of consumer rights and responsibilities. The graphic representation in Figure 1 will serve as a point of reference. The matrix arrays aspects of policy in the left-hand column and rights and responsibilities in the right-hand columns. If the bookpage were more suited to three-dimensional diagrams we would have included consumer policy-makers as a logical third dimension.

In our typology of consumer policy we noted that the distinctions between education, information and protection are not hard and fast. The classification of consumer rights, seemingly first made in an address by J. F. Kennedy, is pretty traditional a decade later. It leaves out the "freedom to consume" (or not to consume) as being antecedent to, and more general and basic than those detailed in the figure.

The matrix tries to make two vital points, namely

that the enforcement of literally every consumer right logically depends on all three types of consumer policy, that is, education, information and protection, and

that for every consumer right there is a corresponding consumer responsibility.

The lesson here is simple and crucial: no matter how aggressively we may use consumer policy, it will not in itself suffice to enforce consumer rights. In the end consumer rights will exist only if at least some individual consumers really exercise some of their rights and responsibilities at least some of the time.

Positive and negative rights and responsibilities. The last statement suggests a few remarks on positive and negative rights and responsibilities. Rights and responsibilities are inherently two-faced. To the positive right to choose between viable alternatives (including having access to suppliers of the brands in question) corresponds the negative right not to have choice imposed (such as by some central planning authority, or by overly well-meaning consumer "protectionists"). To the right to be informed corresponds the right not to be deceived. [Louis L. Stern, "Consumer Protection Via Increased Information," Journal of Marketing (April 1967), pp. 48-52, 49.] To the right to be heard corresponds the right to privacy. [Why should consumers have to listen to the producer-oriented chatter between taxi drivers and taxi dispatchers? Why should we have to put up with 5 x 12 meter billboards and skyscraper-height gasoline signs along the highways?] To the right to safety corresponds the right to take some safety risks-such as smoking cigarettes or driving or swimming without a safety belt-at least as long as we are aware of the risks and are respecting the rights of other consumers.

FIGURE 1

CONSUMER POLICY AND CONSUMER RIGHTS AND RESPONSIBILITIES

Consumer responsibilities present us with an analogous situation. The positive imperative to choose wisely is negated by our freedom to choose what we know is "wrong" for us, or to spend our money foolishly. [Whether this "negative responsibility" is better to be looked upon as "right" or "freedom" is a semantic nicety that we fortunately do not have to discuss.] To the positive duty to keep informed corresponds the "negative" phenomenon of impulse buying, or of taking a deliberate chance at an auction. At least as yet no voice has been raised to prohibit these types of behavior. To the duty of sounding off corresponds the urge to keep quiet, to avoid the unpleasantness and the waste of time involved in asserting our rights. And instead of battling for safety first at all times some of US at least occasionally will put performance [In operating an electric saw, for example.] or, indeed, even fun [Smoking in bed, for example.] above safety. Or we may use a product for another purpose than that for which it was made. [Using a razor-blade for a knife, for example.] Or we may simply neglect maintenance, which in and of itself may be enough to bring safety hazards. The point of all this is that we cannot expect most consumers to be vigilantes of the marketplace most of the time.

It may be observed that most of us have quite positive--often adamant-feelings about what here is loosely termed the negative rights and responsibilities of consumers. Indeed, they all seem to represent widely embraced Western ideals. For the enforcement of positive consumer responsibilities society relies almost exclusively on voluntarism among consumers themselves. On-the other hand, the positive consumer rights, while perhaps self-evident in theory, seemingly need to be constantly reasserted to stay alive. Even though the reassertion of these consumer rights is logically the prime responsibility of consumers, governments and other groups are having to add their weight. The market economy may create the Potential for the realization of positive consumer rights but in a complex society there is no automaticity about their actual realization. This implies cost and effort on the part of individual consumers and consumer policy-making organizations in the struggle to enforce the rights. [Some of the negative consumer rights also call for enforcement effort, such as the right not to be subjected to deception.]

Consumer Policy measures. The cells in Figure 1 give some examples of consumer policy measures. They serve illustrative purposes only. There is nothing sacred about the arrangement; in several instances it is a matter of taste and emphasis rather than principle. This is almost inevitable, given the overlaps between education, information and protection as well as between the several consumer rights. The right half of the matrix would seem fairly selfexplanatory. We shall comment on some of the rights and responsibilities in the left half.

The effective implementation of the right to choose freely assumes a mature consumer. This is a consumer who through a process of formal or informal education has acquired some degree of understanding of personal and household decision-making and budgeting and who has developed a sense of judgment in making buying decisions. As indicated by cell A1 he will also have some insight into the nature of the market economy and an attendant awareness of consumer rights and responsibilities. His chances of making use of his freedom to choose wisely will be enhanced if he is also aware of how his needs will change over the life cycle and of such basic notions as cost-benefit analysis, discounted cash flow, the economics of information and the value of his time.

To make a choice on any basis other than pure whim or impulse the consumer has to articulate (at least to himself) what his major criteria in buying the product really are. He needs information inputs (B1) to help him define what his requirements in the product should be, given his own set of values and circumstances. [Typical question: what should I look for in a freezer?] Should the consumer be unable or unwilling to digest abstract information for these purposes special agencies in some countries, such as the Verein fur Konsumenteninformation (VKI) in Austria, the Citizens Advice Bureaux in the UK and the Konsumentinstitutet in Sweden-may provide him with more concrete - and, by inference, more directive -buying advice. (Should this go as far as quoting brand names we are moving to B2.)

A fairly strong case can be made that-consumer sovereignty as an ideal is approachable only in an open market system. Analogously, we may say that consumer policy to be meaningful requires open markets. It seems equally clear by now that the maintenance of open markets requires consumer policy. The open market policy serves the purpose of maintaining viable alternatives in the marketplace. Thus, when it is viewed from the perspective of consumer policy it logically belongs under consumer protection (C1). Here we also find regulation of such practices as high-pressure and door-to-door selling and sundry varieties of deception in trade which obscure or undermine freedom of choice.

Proceeding to the right to be informed we observe the need ,or generic product and materials information as a logical prelude to the choice among models and brands. This type of information (what will a tape-recorder do that a record-player will not?; what is the difference between nylon and cotton in men's shirts?) in our conceptual scheme falls under the heading of education (A2). The furnishing of data about models and brands is the purpose of information policies implementing the right to be informed, as indicated by cell B2.

There is a broadly felt need in Western countries to safeguard the integrity of product information. In several countries there is mounting pressure - within industry as well as without--towards more informative advertising (C2) Without going into the merits of its policy we may note that the U. S. Federal Trade Commission is a pioneer exponent of the view that advertisers should be prepared to substantiate specific claims made for their products, or to retract false or misleading claims.

Tradeoffs and reenforcement. These are characteristics that apply to both consumer rights and consumer policies. Two things are in a tradeoff relationship when one of them is more or less a substitute for the other (rice and potatoes). They reenforce each other when their joint effect is greater than the total effect obtainable if they are used in isolation (a cake as contrasted to its ingredients). Some examples from consumer rights: if the consumer was informed she can choose wisely (reenforcement). If she has chosen wisely, she will likely not need to complain or to worry about safety (tradeoffs). Similarly, if the pleasure-boat owner about to buy a life vest does not wish to take the time to be informed about the market offerings he may simply get a vest with a safety certificate, but may later find he has to complain about the fabric fading in the sun (tradeoffs). If I have taken time to ferret out my buying criteria I will more likely make an informed choice (reenforcement).

With regard to consumer policies the most dramatic examples of reenforcement occur between consumer education and information. While the reenforcement works both ways, it is far stronger in going from education to information than vice versa. Indeed, one may say that effective consumer information presupposes consumer education. Properly conceived, consumer education provides the citizen with the mental apparatus required to receive and evaluate consumer information. Not only that: we have every reason to expect that well-planned consumer education will provide the stimulus needed to get a ravenous and cumulative information-seeking process going among ever-wider circles of consumers. At present, this type of process is active only among a rather small minority. [Hans B. Thorelli, "Concentration of Information Power Among Consumers," Journal of Marketing Research (November 1971), 427-32.]

Conversely, the most dramatic tradeoff in the consumer policy area occur between consumer information and education on the one hand and protection on the other. This is but natural, in view of the fact that the former policies aim at developing the decision-making capabilities of the consumer, while the emphasis in protection frequently is to substitute the judgment of policy-makers for that of the individual. For instance, a high level of general consumer education would obviate the need for legislation for a period of regret after the signing of door-to-door sales contracts. If there were more consumer information programs, advertising would almost surely be more disciplined--and there would be less concern about the substantiation of product claims.

Policy-makers. This third dimension of Figure 1 was left to the imagination of the reader. In a basic and pervasive sense individual buyers making the myriad day-to-day decisions in the marketplace are the crucial makers of consumer policy. As long as we wish to retain a high degree of consumer sovereignty (and the concomitant open market system) this must be so. Our diagram, however, focuses on organized efforts to educate, inform and protect the consumer. In this view, the policy-makers include consumer organizations, other citizen groups, business, government, educational institutions, and the mass media. In view of the fact that reinforcements and tradeoffs are characteristics of consumer rights and responsibilities as well as of consumer policies, it is hardly surprising to find that the same thing applies to the policy-makers.

To illustrate: from a tradeoff point of view, if business did a better job of informative advertising there would be less need for independent consumer information programs. Similarly, in countries where consumer organizations have not been created (as they have in the US, UK and Benelus countries) to engage in broad-scale consumer information programs, this function has tended to gravitate to government (Scandinavia) or to women's, business and labor groups (Switzerland, France). Reenforcement-wise consumer information can have a multiplier effect if the test reports, labels and quality seals of independent consumer information organizations are used in business promotion programs, reprinted by the press, or discussed on public radio and TV. As regards informative labeling and quality certification programs it would appear that multi-party cooperation between policy-makers is a well-nigh indispensable prerequisite to secure both viability and credibility.

Educational institutions play a role essentially confined to the consumer education area (this is not to say that they are entirely without potential as regards information and protection). Unfortunately, however, one may seriously doubt that schools are doing what they should. Conventional home economics courses in no way meet the agenda implied by the cells in the Education row of Figure 1. For reasons which by now should be abundantly clear, we strongly favor the introduction of obligatory consumer education of the type sketched here at the high school level. We do this even though aware of the fact that there is a tendency afoot to simply push problems to the school system whenever other social institutions have proved unable to solve them. It would seem natural that universities and home economics institutes cooperate with business, consumer groups and governments in the planning of such a curriculum. It is also important that the effort be undertaken from the perspective that while such courses would lay the basis, consumer education, like learning in general, is a life-long process.

BUILDING TRUST IN THE MARKETPLACE

While this is not the place to market a particular brand of consumer policy, a few personal reflections may be permitted in conclusion. Our preference is on education and information rather than on protection--a preference which may have influenced our choice of illustrations in the preceding discussion. This preference is-based on the simple notion that there is no logical end to protective measures, just as there is no logical end to paternalism. [We emphasize, however, that the needs of less developed countries and underprivileged minorities elsewhere may call for strong consumer protection measures.] Too easily to please our taste, protection invites a kind of censorship under which products will have to pass the test of the bureaucrats instead of the test of the marketplace.

It used to be that the austere rule of caveat emptor defined the place of consumers. Many Western countries are now moving at supersonic speed ln the opposite direction, towards caveat venditor (let the seller beware). Open markets with a high degree of consumer sovereignty thrive between the extremes. They are based on trust and on respect for mutual rights and responsibilities. Like all institutions of liberal democracy, trust in the marketplace is a delicate thing that must be fostered with care. This calls for a pluralist approach, for decentralized initiatives in the area of consumer policy. The building of trust also calls for a much greater degree of voluntary cooperation between consumers and producers. On this score there is some reason for optimism: that producer and consumer in the end have more interests in common than in conflict is no more remarkable than the fact that employers and employees do.

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