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Parting with "Blue Monday" – Preferences in Home Production and Consumer Responses to Innovations
Abstract
How can economic theory explain the reasons why consumers adopt innovations? Using the example of innovations in washing machines two approaches are compared. The first focuses in the manner of household production theory on changes in constraints without specifying preferences, leading to the well-known time substitution hypothesis. The second approach develops specific hypotheses about consumer preferences and focuses on how technical change accounts for them. The two approaches are empirically evaluated with a data set representing the motives suggested in washer advertisements for purchasing new vintages of machines over the period 1888 to 1989 in the U.S.
... They are non-renewable in that once they have been used, they cannot be used again. On the other hand, 'tools' are different in that they include relatively more durable goods such as ovens and clothing which are used by consumer to produce lower order goods(see Witt and Woersdorfer 2010). intangible nature of service and the tendency for these to be modified in accordance with the consumer's specifications implies they possess a greater flexibility in serving a wide range of needs. ...
... A number of case studies have begun to study the evolving link between particular goods & services and the underlying needs they serve. The general aim is to uncover general regularities in how product innovations may be linked to satiation of the needs original served by goods and services, such as food(Manig and Moneta 2009;Ruprecht 2005), shoes(Frenzel Baudisch 2006), tourism services(Chai 2011) and washing machines(Witt and Woersdorfer 2010). ...
Using UK household expenditure data spanning over four decades (1960-2000), this paper employs Engel’s needs-based approach to analyzing household expenditure patterns and finds evidence for the existence of a stable hierarchy of expenditure patterns at low levels of household income. Second, we investigate how rising household income influences the manner in which total expenditure is distributed across Engel’s expenditure categories. Our results suggest that i) total household expenditure is distributed across Engel’s expenditure categories in an increasingly even manner as household income increases and ii) over time, there has been an acceleration in the rate at which household expenditure patterns become diversified as household income rises. Finally, we consider how the shape of Engel Curves may help shed light on the relationship between goods and the underlying needs they serve.
... Thus, a possible avenue for overcoming demand satiation and slow demand growth is for entrepreneurs to modify the characteristics of the goods such that they appeal to needs that are not yet satiated (Witt 2001). Witt and Wörsdorfer (2011) find that the characteristics of washing machines initially designed to deliver clean clothes were later modified to reduce the time and physical effort required to undertake washing. Chai (2007) discusses how the characteristics of British inland and seaside resorts that were initially based on Roman medical doctrines to treat serious illnesses slowly evolved between the 17th and 19th centuries to appeal to the need for novel stimuli (see Table 1) via entrepreneurial effort manifested in the construction of new entertainment infrastructure such as pleasure piers, promenading areas, and theatres (Walton 2000:95). ...
... This is typically reflected in the messages producers send to consumers via advertisements that highlight the benefits of their products. For example, in the case of washing machine advertisements, these messages have changed in character to educate consumer about new characteristics highlight how the washing machine can satisfy a wider set of needs (Witt and Wörsdorfer 2011). ...
Two centuries of continuous economic growth since the industrial revolution have fundamentally transformed consumer lifestyles. Here Keynes raised an important question: will consumption always continue to expand in the same manner as it has in the previous two centuries? If so, how? This paper critically reviews a body of work that has adopted the Learning To Consume (LTC) approach to study the long run growth of consumption (Witt 2001). By borrowing certain established insights from psychology and biology about how consumers learn and what motivates them to consume, it highlights how rising income, new technologies and market competition have combined to trigger important changes in both the underlying set of needs possessed by consumers and how they learn to satisfy these needs. Methodological issues and open questions are discussed.
... This is typically reflected in the messages producers send to consumers via advertisements that highlight the benefits of their products. For example, in the case of washing machines advertisements, these messages changed in character as entrepreneurs sought to stimulate greater demand growth by innovating the characteristics of these durable goods and appealing to a wider set of needs (Witt and Wörsdorfer 2011). ...
Two centuries of continuous economic growth since the industrial revolution have fundamentally transformed consumer lifestyles. Here Keynes raised an important question: will consumption always continue to expand in the same manner as it has in the previous two centuries? If so, how? This paper critically reviews a body of work that has adopted the Learning To Consume (LTC) approach to study the long run growth of consumption (Witt 2001). By borrowing certain established insights from psychology and biology about how consumers learn and what motivates them to consume, it highlights how rising income, new technologies and market competition have combined to trigger important changes in both the underlying set of needs possessed by consumers and how they learn to satisfy these needs. Methodological issues and open questions are discussed.
... This is typically reflected in the messages producers send to consumers via advertisements that highlight the benefits of their products. For example, in the case of washing machines advertisements, these messages changed in character as entrepreneurs sought to stimulate greater demand growth by innovating the characteristics of these durable goods and appealing to a wider set of needs (Witt and Wörsdorfer 2011). ...
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Using data spanning over four decades (1960-2000), this paper employs Engel's needsbased approach to analyzing household expenditure patterns to find evidence for the existence of a stable hierarchy of expenditure patterns at low levels of household income. Second, we investigate how rising household income influences the manner in which total expenditure is distributed across Engel's expenditure categories. Our results suggest that i) total household expenditure is distributed across Engel's expenditure categories in an increasingly even manner as household income increases and ii) over time, there has been an acceleration in the rate at which household expenditure patterns become diversified as household income rises. Finally, we consider how the shape of Engel Curves may help shed light on the relationship between goods and the underlying needs they serve.
Consumer research has largely missed out on two key developments in social cognition research: the growing evidence that much of social judgment and behavior occur without conscious awareness or intent and the substantial moderating influence of social- and self-related goal pursuits on basic cognitive and reasoning processes. This evidence is described and its implications are drawn for nonconscious--including subliminal--influences on consumer behavior. The consumer research domain appears ideal for the necessary next wave of this research: the assessment of how much of a role nonconscious influences play in real life in decisions and behavior that are of real consequence to the individual. Copyright 2002 by the University of Chicago.