HOUSEHOLDS AS

ECONOMIC
AGENTS
What influences?

1. Spending
2. Saving
3. borrowing
Think of five friends and
their families
 WHAT DOES YOUR FAMILY BUY?
 WHAT DO YOUR FRIENDS’
FAMILIES BUY?

 WHY IS YOUR FAMILY

SPENDING MONEY ON
DIFFERENT, OR THE SAME
ITEMS? OR WHY DOES YOUR
FAMILY SPEND MORE OR LESS
WHAT DO MOST HOUSEHOLDS BUY?
THE MORE YOU EARN THE MORE
YOU CAN SPEND!
FOOD

OTHER FACTORS THAT

CLOTHING MEDICINE
DETERMINE HOW MUCH YOU
SPEND ARE:
DISPOSABLE
INCOME
1. WEALTH
FOOTWEAR AMENITIES 2. CONFIDENCE
3. THE RATE OF INTEREST
TRANSPORT 4. THE DISTRIBUTION OF INCOME
5. ADVANCES IN TECHNOLOGY
WEALTH ALLOWS
FOUR THINGS:
 It generates income
 It can be cashed in a
nd spent
 It can stand surety
 It increases confiden
ce, and
people spend more
CONFIDENCE IS
AN IMPORTANT
MOTIVATOR TO
BE A CONSUMER!

If you are confident and

optimistic, you are more
likely to spend money.

Why do you think so many

marketing campaigns use
“successful” and “happy”
role-models?
 HIGHER INTEREST
=
LOWER SPENDING

Interestingly, “savers”
tend to be richer than
“borrowers "and
spend small amounts
of their income!

Unless you have cash

(wealth) to spend, you
need to borrow! When
interest is high it
becomes expensive,
and you spend less!
 IDEALLY YOU WANT INCOME EVENLY DISTRIBUTED.

IF 100 HIGH-END EMPLOYEES SPEND $2000 EACH YOU HAVE $200 000
IF 1000 MID-INCOME PEOPLE SPENT $2000 YOU HAVE $2 000 000

M N
CO TIO
E
IN BU
OF R I
ST
DI
 TECHNOLOGY
TECHNOLOGY IS CONSTANTLY UPDATED, WE SPEND MONEY TO STAY UP TO DATE!
 AVERAGE PROPENSITY TO
CONSUME
 AS INCOME RISES, PEOPLE ARE ABLE TO EITHER SPEND MORE; OR
SAVE MORE. A PROFESSIONAL FOOTBALLER MAY EARN €10 000 PER
WEEK, WHILE A CLEANER AT THE STADIUM EARNS €1000 PER WEEK.
 DIFFERENT PEOPLE SAVE
FOR DIFFERENT REASONS!
 RETIREMENT  “TARGET SAVING” – I WANT TO
BUY A CAR!
 EMERGENCIES  EDUCATION OF CHILDREN

 BENEFITS OF INTEREST
 BOOST INCOME
WHAT
INFLUENCES
SAVING
PATTERNS?
PROPENSITY TO SAVE
WHY DO PEOPLE BORROW MONEY?

BORROWING
BORROWING ALLOWS PEOPLE TO SPEND
MORE THAN THEIR DISPOSABLE INCOME
THE GINI INDEX

https://www.theguardian.com/inequality/datablog/2017/apr/26/inequali
ty-index-where-are-the-worlds-most-unequal-countries

https://data.worldbank.org/indicator/SI.POV.GINI?end=2018&start=20
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