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Consumption refers to expenditures by households (consumers) on final goods and


Keynesian Theory of consumption

The Keynesian Theory of consumption is that current real disposable income is the most
important determinant of consumption in the short run. Real Income is money income adjusted
for inflation. It is a measure of the quantity of goods and services that consumers have buy with
their income (or budget).

For example, a 10% rise in money income may be matched by a 10% rise in inflation. This
means that real income (the quantity or volume of goods and services that can be bought) has
remained constant.

The chart above shows how real disposable incomes and consumer spending have grown in
recent years. This increase in real incomes has been a factor behind the yearly growth of
consumer demand in each of the last nine years.

The gradient of the consumption curve gives the marginal propensity to consume. 2 The Keynesian Consumption Function Disposable Income (Yd) = Gross Income .(Deductions from Direct Taxation + Benefits) The standard Keynesian consumption function is as follows: C = a + c Yd where. c = marginal propensity to consume (mpc). If an individual's income fell to zero some of his existing spending could be sustained by using savings. it is the percentage of each additional pound earned that will be spent. Simply. This is the change in consumption divided by the change in income. This is shown below: . In this case the marginal propensity to consume has fallen leading to a fall in consumption at each level of income. This is known as dis-saving. A change in the marginal propensity to consume causes a pivotal change in the consumption function. so does total consumer demand. There is a positive relationship between disposable income (Yd) and consumer spending (Ct). This is the level of consumption that would take place even if income was zero. As income rises. C= Consumer expenditure a = autonomous consumption.

pdf .uk/PDF%20Files/Brief011.ed.for example a rise in interest rates or a fall in consumer confidence might lead to a fall in consumption spending at each level of http://www. A rise in household wealth or a rise in consumer's expectations might lead to an increased level of consumer demand at each income level (an upward shift in the consumption curve).income relationship changes when other factors than income change . REFERNCES: 3 Key Consumption Definitions Average propensity to consume = Total consumption divided by total income Average propensity to Save = Total savings divided by total income (also known as the Saving Ratio A Shift in the Consumption Function The consumption .

function and meaning of the consumption patterns that characterize the different lifestyles that coexist in our affluent. . Briefly stated. liberal. if a lifestyle can be defined as the manner of living that reflect a household’s values and attitudes. a consumption pattern is the relation to goods and services that characterize that lifestyle. Consumption patterns one of the most important drivers of development patterns in the industrialized world and will serve as case for the study of scenarios and transition management in Belgium. than the structure. 4 DETAIL EXPLAINATION. While the concept of “consumption pattern” is omnipresent in sustainable development literature since its appearance in Agenda 21. democratic and capitalist societies. Here we will define a consumption pattern as that aspect of a lifestyle (or livelihood) that relates to the nature and amount of the different goods and service that the households consider as adequate for fulfilling their needs. What will be addressed here is less households’ consumption of a specific commodity or service such as transportation or food. it is generally left undefined as if it is not necessary to be more explicit about it.

fossil fuels. and water). identity and freedom. along with massive unemployment. idleness. creation.The production. food. These are: subsistence. not to mention severe economic dislocation. inhibiting satisfiers or plain destroyers. no doubt. while the use of commodities themselves (e. 5 CONSUMPTION OF GOOD AS A FUNCTION OF OUR CULTURE: . They are more or less adequately fulfilled by satisfiers. which can vary from place to place and time to time. is that it may be the most difficult to change. MAX-NEEF’S (1991) NEED-SATISFIERS THEORY: We will use Max-Neef’s (1991) need-satisfiers theory as the foundations of a framework for analyzing lifestyles and household’s consumption patterns. RESEARCHES BASED ON CONSUMPTION PATTERN: Several researches have been conducted on the study of consumption patterns out of which one is given below. In Max-Neef’s theory. as economists note. entertainment. our consumption patterns are so much a part of our lives that to change them would require a massive cultural overhaul.g. it requires the creation of factories and factory complexes whose operation creates toxic byproducts. A drop in demand for products. They can be more or less specialized (addressing only one need at a time) or synergetic (addressing several needs at a time). etc. They can also be pseudo-satisfiers. satisfiers belong to different existential categories: being. which clusters? . automobiles) creates pollutants and waste. communication. processing. participation. Yet of the three factors environmentalists often point to as responsible for environmental pollution — population. etc.) is privileged for which need. understanding.): what needs are at stake in each of them?  Relationships between consumption clusters and satisfiers: what kind of satisfiers (marketable or not. One reason.  Relationships between needs and consumption clusters (housing. individual or collective. culture. and consumption. affection. of commodities requires the extraction and use of natural resources (wood. ore. clothing. protection. Max-Neef defines nine fundamental universal needs amongst which he finds no permanent. fixed hierarchy. technology. brings on economic recession or even depression. doing and interacting. having. and consumption — consumption seems to get the least attention.

. Ethiopia. the pace of these changes seems to be accelerating. As to statistics by World Bank.e.often referred to as the “nutrition transition” . Australia. it also brings about qualitative changes in the production. we will be more confident in the fruitfulness of the framework for designing scenarios for the future. especially in the low-income and middle-income countries. 3. population in the world is growing by more than 200. etc. food consumption has become a fast rising concern.000 to 3. The countries with the maximum food intake i. processing. Wilkinson 1973. With a population of about 6 billion. Changes in diets. the average food intake per person is high. where maximum population falls into the below poverty line (BPL) category. Sometimes the actual food consumption is lower than to quantity of food available depending upon wastage and losses of food during the process of storage. FOOD CONSUMPTIN PATTERN: Economic development is normally accompanied by improvements in a country’s food supply and the gradual elimination of dietary deficiencies. Kazakhstan etc have an annual intake of 3. Many factors govern the pattern of food-intake.500 calories per person are United States of America. The countries with the minimum food intake are Afghanistan. Canada. “Food consumption can be defined as the amount of food available for human consumption. In countries. Angola etc. distribution and marketing of food.500 calories per person. Moreover.000 people a day and that has an impact on world food consumption. and E. The main historical and anthropological accounts of the diversity and evolution of consumption patterns (Campbell 1987. Furthermore. we will see if it can account for the changes in lifestyles and consumption patterns in societies and history. The per capita food consumption over the world simply means the total food consumption divided by total population. B. 6  Relationships between satisfiers and consumption clusters. Douglas and Isherwood 1979. Mongolia. patterns of work and leisure .are already contributing to the causal factors underlying non communicable diseases even in the poorest countries. cooking etc. Turkey etc. If we succeed in doing so. Chad. As a first test for the “needs-satisfiers attributes” framework. not all of which are positive. So there. Increasing urbanization will also have consequences for the dietary patterns and lifestyles of individuals. the per capita food intake is also less. Portugal. France.) will be reviewed in an attempt to reformulate them in our “Needs-Satisfiers Attributes” matrix. Fine. Mexico. The developed countries enjoy a higher standard of living. thus improving the overall nutritional status of the country’s population. Leopold 1993. Argentina.

it is important to understand their needs for healthcare. however. and for a few participants alcohol consumption actually increased. The researchers used linear regression to develop drinking trajectories over 1992 to 2006. male. The results were used to group the participants into one of five drinking categories. Each had a minimum of five interviews about alcohol consumption. participants who were shown to have had a history of problem drinking were found to show an increase in alcohol consumption. . It only included the individuals who had survived the sample period of 1992 to 2006. It also determined to examine baseline personal characteristics and subsequent life events that were associated with different alcohol-consumption trajectories during a follow-up period lasting 14 years. which included participants aged from 51 to 61 years in 1992. There was a total of 6.787 participants.760 were women. and of those participants. Alcohol consumption is one area that requires attention. A recent study looked at the alcohol-consumption trajectories and associated characteristics that impact adults over the age of 50. unmarried. Also. The results of the study showed that overall alcohol consumption declined among adults over 50. White. Alyssa Platt. 7 Alcohol: As millions of baby boomers enter retirement age. highly educated. The rate of decline. was different among the participants. The participants who showed an increased consumption of alcohol were more likely to be affluent. Frank A. The objective of the study was to look at the changes in drinking choices of older adults over the age of 50. income. less religious and in good health. health and attitudinal characteristics in addition to life events and drinking-trajectory category. Sloan and Philip Costanzo examined the factors that must be studied in older adults to understand their drinking trajectories. Understanding the factors that impact drinking in older adults helps aid in alcohol abuse prevention and education efforts. The researchers gathered data from the Health and Retirement Study. The researchers then analyzed the relationship between personal demographic. 3.

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