Consumer Behaviour and Economic Growth in the Modern Economy (RLE Consumer Behaviour)

Henri Baudet, Henk van der Meulen

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781317646631
• Edition: 1
• Topic: Business
• Subtopic: Consumer Behaviour
• Index: Business

These essays show that industrialisation and fast economic growth have changed not only the broad material environment, but have also had a very important impact on basic food consumption.

The introductory chapter takes a theoretical view and tries to establish the interrelationship between economic forces and social habits. The other contributors analyse how the experience of Europe, Japan and North America fit this general explanation and they demonstrate how cultural and regional differences have shaped the development of consumer behaviour and patterns of consumption over the last two centuries.

Chapter 1
Introduction

Henri Baudet and Henk van der Meulen

General

The first aspect: standard of living

The second aspect: consumption and life style

The third aspect: consumption and business cycles

Notes

General

"How did 19th and 20th century economic growth change consumer behaviour and consumption patterns in Europe, Asia and the New World?"

This question is the concern of the seven papers in this book. They are contributions dealing with vastly different geographical units. In point of fact, as far as dating is concerned, the contributions range, for the most part, over the history of consumption in the 19th and 20th centuries and rely heavily on empirical research. Consumption is described and analysed with the help of its manifestations which we now know: mostly statistical material dealing with quantities, prices and incomes, supplemented by sources of a more qualitative character. In the case of such research, the formulation of questions and the quality of the statistical material used determine, to a great extent, the ultimate result. Besides, it is almost inevitable that different research workers differ greatly in the matter of approach, analysis and results. This book is no exception. This introduction is consequently intended to make an attempt to place the seven papers more or less in a framework of a theoretical kind for which, naturally, the editors of this volume are solely responsible, as they are for the placing of the papers in the framework.

The starting point for this collection of papers is the pursuit of modern, historical consumer research. The extent to which the demand side of the economic process interests economists and historians, and the manner in which it interests them, have been rather subject to change, in the course of the past 70 years or so; not least influenced by the expanding social sciences and the mainly post-war developments in economic theory. There are, in any case, clearly two trends: the interest in consumption as a subject of research is increasing and the nature of the interest is changing - from the traditional "standard of living debate" to a rather large number of different aspects.

In this introduction, we shall be dealing with three different lines of approach to consumption in the past which each demand their own methodology and, all three, in a sense even their own discipline (theoretical framework).

Firstly, there is the historical development of the standard of living, involving particularly that of the working class. This is the "traditional" historical approach, which, in no way, means that it is out of date. The main concern here is the development of (frequently improvement in) the "shopping basket", both quantitatively and qualitatively. The growing purchasing power of the masses brings with it social progress as well as a sharply improving general state of public health. The shifts among various groups of consumer goods which emerge from budgetary researches over a period of time, have engaged the attention of many research workers ever since the work of Ernst Engel and his well-known law (of 1857).

Secondly, there is (collective) consumer behaviour. How do consumers adapt to changes in their material environment, changes which occur gradually, but also frequently by fits and starts, in a revolutionary way? The range of consumer goods and the means many people have to acquire them (see the first aspect) change dramatically in the 19th and 20th centuries. Life style and markets change rapidly and consumers adapt to them. "The power to become habituated to his surroundings is a marked characteristic of mankind".¹

This approach to consumption brings us face to face with the phenomenon of adjustment: the adjustment of demand to supply, possibly promoted by a positive inclination on the part of societies to accept new products (innovations).

This phenomenon, as well as the interaction between the demand and supply sides of the market, which is called into being by this innovative be haviour, is considered by us to be part of historical processes of a socio-psychological character.

Thirdly and finally, there is the connexion between business cycles and consumption. This approach currently enjoys a growing interest on the part of writers concerned with the history of consumption, and this volume also bears witness to this fact.

This aspect certainly includes a modern standard of living debate based on macro-economics. During the Groningen Conference there was in fact some talk by one of the commentators of a "standard of living debate in disguise". Yet this does not do justice to recent profound questioning and much modern research in this field. Besides, it is mainly concerned with the relationship between business cycles and consumption and not solely with increasing purchasing power and patterns of consumption. We have merely to think of the immense field of research presented by the problem of changing income distribution. In this respect, the working class is naturally no longer the only group being considered.

However, business cycle research can also be focused on the connexion between the various cyclical stages and the innovative behaviour of both consumer and producer. It is obvious, in this connexion, that particularly the periods of depression and the lowest points reached before the up-turn are of interest. The tendency which can be observed in consumers to react innovatively, precisely at these periods, forms, as it were, a parallel to Schumpeter's economic theory, whose starting point, as is well known, was the innovative behaviour of the entrepreneur.

It will be abundantly clear from the above remarks that the three lines of approach mentioned are not in any way mutually exclusive. In the end, it is a matter of various ways of looking at one single phenomenon, i.e. human consumption, however many forms it may take.

The First Aspect: Standard of Living

No argument is needed for the fact that the inter est of historians in consumption grew very slowly and is now scarcely a hundred years old and that publications of good quality began to be produced about the turn of the century. Nor it is necessary to argue that interest, at that time, was mainly focused on the working-class standard of living which, following a lengthy period of immobility, began relatively late to move (upwards), and, finally, that emotional involvement with social abuses was the strongest incentive to all this. In later years, these specialist researches were mainly slotted into dissertations on the Industrial Revolution. We shall revert to this later. Nevertheless, research purely into living standard remained a subject apart. Gradually, other than purely workers' budgets began to figure in it. Particularly after the Second World War, a link developed between this type of consumer research and studies of economic growth. At this moment, great attention is being paid particularly to the connexion between the standard of living and the level of economic activity, and this is understandable, in view of the depression of the 80's which seems to lie ahead of us. Our third line of approach will concentrate on this.

The quantitative material for research into the standard of living was provided by the surveys instituted in the 19th century, of the well-being and (particularly) the afflictions of the working class. These surveys were the outcome of the "Social Question" and the cautious beginning of social legislation. They were concerned with working and living conditions, workers' budgets and incomes. The beginning is naturally very important, but reviewed over longish periods, the information would seem indeed to be of secondary importance. There is a lack of usable statistics of family consumption in most countries until (well into) the period between the two World Wars. Consequently we are dependent, for the 19th century and a considerable part of the 20th, on case studies, having some normative validity, and on a great deal of indirect and sometimes fortuitous information, and for the rest, on the resourcefulness of the researcher himself in deducing data from material collected primarily, or even entirely, for other purposes.

Usable data are, for example, those of a fiscal nature derived from official statistics, especially those from the Excise, of course. This kind of data, however, serves, at best, to provide an insight into averages of per capita income and consumption and usually provides few starting points for disaggregation. Data on the 'macro'-composition of the shopping basket are of the same kind. Statistics of production, imports, goods in transit and exports can be helpful, provided they have reliability which, in a number of cases, however, cannot fail to be described as slight.

Finally, in this connexion, mention may be made of the research being carried out in Belgium, at the Universities of Ghent and Bruges, on anthropometric characteristics. This comes down to the analysis and exploitation of test reports on recruits for the Belgian armed forces. All kinds of data from these reports, especially shifts in height and weight, are being correlated, in this research, with developments in the dietary pattern.

If, certainly for the first period, attention was focused on diet and, above all, the standard of living was, in principle, measured against it, the announcement that the field of vision had gradually opened out does not, of course, report anything new. With economic development and social emancipation, the share of expenditure on food in the budget has been reduced, a fact which is in complete conformity with Engel's Law (1857). With the gradual rise in the standard of living and, ultimately, the increase in so-called discretionary purchasing power (that is the amount which is left when personal income is reduced by the basic costs of subsistence, taxation and savings), the consumers' ordering of preferences has become a more and more important, widely varying element in what is taking place in the field of consumption.

The development of the standard of living (initially that of the working class, but subsequently more widely understood; measured, in the first instance, against the level of supply with respect to the prime necessities of life, and subsequently expanded to a much wider range of consumer goods) is no longer central - in any case, no longer exclusively central - to the study of the history of consumption. There, the problems posed by the ordering of preferences have come to occupy a considerable amount of space. What is more, as already stated, all sectors of consumption have come under review, and the whole of the theory of utility and value (and, incidentally, a good slice of economic theory) has been brought in. In this way, a historically speaking new type of question, deviating entirely from tradition, is being asked; if we want to trot out an old formulation and give it a new content, we can say that it is now more a question of way of life, of life style than of mere standard of living.

To enquiries about "what", numerous enquiries about "how" and "why" have been added: how the ordering of preferences works exactly, how this ordering comes about, and why, in a historical context, preferences have arisen in a definite period and within a given market in the way in which they have arisen, why consumers have decided on their choices: certain goods have caught on and others have been non-starters as far as consumers' shopping baskets are concerned. In short: what has been going on in human beings.

Six of the seven papers in this volume more or less fit into the pattern described above. Attention is paid to the traditional standard of living concept but, in no single case, is it an objective in itself.

• Peter Scholliers and Chris Vandenbroeke regard the development of food consumption patterns as being influenced, inter alia, by the process of industrialization and especially by the disciplinary effect of work which appeared with industrialization; the suppression of a distinct leisure preference which they see in the Ancien Régime. We shall revert to this in our concluding review.
• Henri Baudet and Henk van der Meulen use (food) consumption patterns, as deduced from (principally workers') budgets and food production statistics, on the one hand for discussions about more or less individual behaviour and a reconsideration of Engel's Law, and on the other hand, long-term collective developments are mirrored in other macro-economic developments.
• Maurice Aymard's paper goes into primarily physical changes in food consumption in France and Italy after 1500. Here, welfare development means pretty well literally the development of (physical) well-being. We count ourselves as being happy to see in this contribution a representative of the typical French 'ultra long-wave' (longue durée) approach.
• Mine Yasuzawa involves in her, geographically highly differentiated review of the living standard of the 'ordinary' Japanese, above all socio-cultural backgrounds, as well as the socio-political watershed of 1868, the end of the Tokugawa period.
• The paper by David Felix is concerned with an area (Latin America) which, put guardedly, can be counted among the less developed economies, having, for that reason, a number of special problems. Concepts such as standard of living and social emancipation play a somewhat different part here, especially in their mutual relationship.
• The contribution by Walter Minchinton largely falls outside this aspect. We shall discuss it in our consideration of the second method of approach.
• Hans Teuteberg finally offers us a careful review of German food consumption after 1850. As with Maurice Aymard's contribution, this involves time series with respect to consumed quantities of a large number of foodstuffs. Teuteberg then provides a valuable contribution to the discussion revolving round specific methodological problems connected with this kind of research.

The Second Aspect: Consumption and Life Style

In the 19th and 20th centuries, the Western World presents a picture of a stronger-than-ever model of product development and innovation. Changes in person-product relations have never, in the past, particularly attracted the attention of economic historians. It was a considerable number of years after the Second World War before people realized that the whole problem of product development and innovation, consumer behaviour and consumption in a developing industrial society, represented an important field of research in economic history. It is true that elements of the problem had already been previously discussed, but more often than not in isolation or, at any rate, not in the complex context in which the problem is now seen.

This situation can be explained from at least three angles:

Firstly, we obviously did not see how promising a comprehensive formulation of the problem, in the above-mentioned sense, could be. Consequently, there was no necessity for research into the many kinds of relations which figure in this field.

Secondly, there was no economic theory explicitly occupied with the influence of the demand side on the market process, (i.e. otherwise than in an absolutely general sense), on the structure of production and on the direction in which production could develop.

And thirdly, multi- or pluri-disciplinary research, indispensable for the handling of consumer behaviour problems, was scarcely developed some 20 years ago. The use by historians of not only economic theory but also sociology, social psychology and other behavioural sciences does not go back any further than the 60's. Only then did it gradually become possible to study processes such as industrial development and product innovation, explicitly from such a (consumer) behaviour standpoint.

The Industrial Revolution and industrialization in a more general sense were, historically speaking, successively looked at from a 'heroic' standpoint (the triumph of technology), a 'sociological' standpoint (the emancipation of the working class) and an 'economic' angle. Starting from this last aspect, it is possible to undertake special research into the demand side of the economic process, which is a collective consequence of individual behaviour. For the rest, this does not mean to say that, in the first two cases, no attention was given to consumption. But the point at issue was either an objec tive datum - in the first case - or purely the workers' standard of living - in the second case.

Changes in habits and needs, changes in systems of preference in a situation of increasing prosperity were likewise not subjects which economists were primarily interested in.

Consumer preferences were, in theory, ultimately definitive for the composition of the production package, but how these preferences originated and developed, long remained in the 'black box'. Rel ative prices supplied, in any case, the 'most desirable' way out. If we understand him correctly, Rostow went a step further by recognizing the connexion between the growth of the economy and the consumers' willingness to accept innovations.

The readiness to innovate as a collective attribute of consumers originates from two mutually connected developments:

On the one hand, with increasing prosperity, an ever-increasing number of consumers with purchasing power available for innovations (i.e. discretionary purchasing power) and, on the other hand, standard ized production of uniform consumer goods leading to mass production.

While the number of products, manufactured in massive, un...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Original Title
• Original Copyright
• Contents
• Foreword
• 1. Introduction.
• 2. The transition from traditional to modern patterns of demand in Belgium.
• 3. Food consumption and welfare 1852-1911.
• 4. Dietary changes in Europe from 16th to 20th century, with particular reference to France and Italy.
• 5. Interrelations between consumption, economic growth and income distribution in Latin America since 1800: a comparative perspective.
• 6. Changes in lifestyle in Japan: pattern and structure of modern consumption.
• 7. Convention, fashion and consumption: aspects of British experience since 1750.
• 8. Food consumption in Germany since the beginning of industrialisation: a quantitative longitudinal approach.
• 9. Conclusion.