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2019 | Buch

Introduction: Demand, Complexity, and Long-Run Economic Evolution Kapitel lesen Erstes Kapitel lesen

Demand, Complexity, and Long-Run Economic Evolution

herausgegeben von: Dr. Andreas Chai, Dr. Chad M. Baum

Verlag: Springer International Publishing

Buchreihe : Economic Complexity and Evolution

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

The purpose of this contributed volume is to consider how global consumption patterns will develop in the next few decades, and what the consequences of that development will be for the economy, policymakers, and society at large. In the long run, the extent to which economic growth translates into better living conditions strongly depends on how rising affluence and new technologies shape consumer preferences. The ongoing rise in household income in developing countries raises some important questions: Will consumption patterns always continue to expand in the same manner as we have witnessed in the previous two centuries? If not, how might things evolve differently? And what implications would such changes hold for not only our understanding of consumption behavior but also our pursuit of more sustainable societies?

Inhaltsverzeichnis

Frontmatter
Introduction: Demand, Complexity, and Long-Run Economic Evolution
Abstract
Over the past two centuries, the unprecedented expansion of consumer spending across advanced economies has been an essential driver of long run-economic growth, innovation, and prosperity. So essential in fact, that increases in consumer purchasing power are also frequently mentioned as a main reason for why long-run economic growth is inherently desirable: more growth offers consumers greater opportunity to better satisfy their needs and wants. At the same time, the underlying problems that consumers seek to satisfy are also fundamentally changing: as the overall share of spending dedicated to the satisfaction of basic needs has declined, more spending is inevitably dedicated to complex activities and domains in which consumers can exercise a higher degree of discretionary power. In these new domains, the information and social environment play a much greater role in shaping the orientation of consumer spending. These long run trends raise new questions, such as: Will levels of consumer spending continue to grow as they have recently? Can we expect consumer welfare to benefit from future consumption growth the same way that it has in the past? This considers the long-run evolution of consumption patterns alongside the social, behavioural, and technological forces that have shaped, and indeed motivated them. In doing so, this collection of chapters contributes to a better understanding of the structural changes to consumer demand that are currently taking place in advanced economies and their implications for how we understand and strive for economic growth and consumer welfare amidst.
Chad M. Baum, Andreas Chai

Re-thinking the Economic Possibilities of Our Grandchildren

Frontmatter
Work and Consumption in an Era of Unbalanced Technological Advance
Abstract
Keynes’s “Grandchildren” essay famously predicted both a rapid increase in productivity and a sharp shrinkage of the workweek – to 15 h – over the century from 1930. Keynes was right (so far) about output per capita, but wrong about the workweek. The key reason is that he failed to allow for changing distribution. With widening inequality, median income (and therefore the income of most families) has risen, and is now rising, much more slowly than he anticipated. The failure of the workweek to shrink as he predicted follows. Other factors, including habit formation, socially induced consumption preferences, and network effects are part of the story too. Combining the analysis of Keynes, Meade and Galbraith suggests a way forward for economic policy under the prevailing circumstances.
Benjamin M. Friedman
Institutions Hold Consumption on a Leash: An Evolutionary Economic Approach to the Future of Consumption
Abstract
As first suggested by Keynes (1930), much thinking about the future of consumption starts with claims about future income, technology or demographics, perhaps concocted in a growth model, and then considers what consumption will look like, as a separate question, given those priors. A different approach starts one step further back with inquiry into the type of institutions that would produce such evolutionary growth. You then ask how those same institutions would shape consumption. I argue that the future of consumption depends on income and innovation, which themselves depend on the evolution of institutions. I suggest that this is an evolutionary economic approach to the future of consumption.
Jason Potts
The Mortgage Treadmill Versus Discretionary Spending and Enforced Leisure
Abstract
This paper undertakes a Post Keynesian/evolutionary examination of drivers of consumers’ spending in economies where productivity and per-capita income are rising. It argues that housing affordability will continue to decline as banks will be willing to risk facilitating ever-higher mortgage/income ratios, and that this will limit the ability of younger generations of consumers to reduce their working hours. Rising overall affluence will bring greater discretionary spending opportunities to some consumers, but nervous consumers may not be willing to spend more and environmental concerns may pose limits for discretionary purchases. The robotic revolution will have profound distributional consequences that will, if not addressed, enhance potential for instability.
Peter E. Earl
Ars Ultima Spes? Some Notes on the Unsustainability of Today’s Capitalism and Culture as a Possible Remedy
Abstract
Current forms of capitalism demand the continuous creation of new industrial sectors, for both supply-side and demand-side reasons. Partly derived from the nature of technology, which often exhibits economies of scale, and partly from actors searching for investments in R&D to reduce production costs, increasing returns in the production of goods and services are responsible for any resulting increases in productivity. The system is thus sustainable in the long-run only if the advent of new sectors favours the absorption of excess labour-supply and generates new income. On the demand side, consumerism has created the conditions for the continuous increase in the goods and services perceived to be needed by consumers. Whether this dynamic balance is sustainable in the long-run is highly questionable. On the one hand, consumers might face the satiation of their needs. On the other hand, a constant increase in the production of goods and services requires a corresponding increase in the use of resources, engendering harmful production externalities, such as pollution, and in the disposal of old artefacts. This paper identifies the main mechanism underlying the structural dynamics that have steered the way along this path during the century-old shift from craft- to mass-production. Focusing on Scitovsky’s idea of creative consumption and the relevance of active public policies and an educational turn for fuelling it, the paper attempts to offer a suggestive solution on how the path may be reversed.
Mario Cedrini, Marco Guerzoni

New Perspectives on the Long-Run Evolution of Demand

Frontmatter
Tackling Keynes’ Question: A Look Back on 15 years of Learning to Consume
Abstract
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.
Andreas Chai
The Evolution of Consumption and Its Welfare Effects
Abstract
In this paper the evolution of consumption is explained on the basis of a theory that connects preferences over actions to the motivational forces driving actions. More specifically, the hypotheses about what motivates consumption activities draw on insights from biology, behavioral science, and psychology. With secularly rising income, the growing consumption opportunities and the expanding consumption alter the underlying motivational forces and induce a change of preferences. As a consequence, the structure of consumption expenditures is systematically transformed. In the light of this explanation, the paper analyzes the effects of the growth and transformation of consumption on individual welfare. As turns out, the motivations driving the growth of consumption do not necessarily imply that this growth indeed results in welfare increases, particularly when the ability to spend on consumption is already high. Moreover, when preferences change, the measurement of the welfare effects of the growth and transformation of consumption depends on the arbitrary choice of a reference point. This implies an ambiguity that raises further queries about the normative foundations of the ubiquitous calls for continued consumption growth.
Ulrich Witt
How Where I Shop Influences What I Buy: The Importance of the Retail Format in Sustainable Tomato Consumption
Abstract
Although interest in sustainable food has increased substantially in recent years, the actual demand for such products has often risen quite unevenly across people. Making sense of the variable pace of behavioral change thus requires us to explore the foundations of sustainable consumption more closely, especially the importance assigned to specific attributes and the types of tradeoffs that prevail. Accordingly, this study utilizes a type of discrete choice experiment (DCE) to explore the influence of retail formats on decision-making processes. Stated-preference methods such as DCEs have proven useful to explain how and why individual willingness to pay (WTP) for qualities such as organic, fair trade, and locality can differ. By mostly focusing on product qualities, however, the importance of the retail format where products are purchased, and their impact on the valuation of attributes, is left unexplored. Framing this DCE in relation to tomato consumption, we find that type of retail format is a significant determinant of purchasing behavior, both on its own and via its interaction with the other qualities.
Chad M. Baum, Robert Weigelt
Innovation, Structural Change and Multisectoral Economic Growth
Abstract
In this work, we draw upon the Neo-Schumpeterian concept of sectoral systems of innovation to reflect on the uneven sectoral patterns of productivity growth observed in modern economies. Inspired by recent contributions within evolutionary economic theory, we present a formal proposal to integrate uneven sectoral productivity growth in a multisectoral growth model. In this model, certain demand-side elements turn out to be crucial. More precisely, we explore the interactions between technological factors, income growth, and distinct income elasticities of sectoral demand underlying structural change. Thereby, we obtain a representation of economic growth as a long-run property which emerges from complex interactions between sectoral innovation, and certain (often-overlooked) demand-side fundamentals.
Isabel Almudi, Francisco Fatas-Villafranca
Metadaten
Titel
Demand, Complexity, and Long-Run Economic Evolution
herausgegeben von
Dr. Andreas Chai
Dr. Chad M. Baum
Copyright-Jahr
2019
Electronic ISBN
978-3-030-02423-9
Print ISBN
978-3-030-02422-2
DOI
https://doi.org/10.1007/978-3-030-02423-9

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