Sebastian-Raul, PAVEL

ANR: 403400

Change, Consumption and Social Environment

~On the difficulties of a pure economic account of consumer behavior~

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While economics is about how people make choices,

Sociology is about how they don't have any choice to make.

Bertrand Russell

Abstract: Consumption is part of the individual social choice. Rather than pursuing just a

constant maximization of utility, the behaviour of the consumer is bended toward self-image

and self-actualization. Observing such a behavior, one finds nothing about the consumer's

needs, only about the consumer's practical choices. If choices are not expressing a complete

set of preferences or needs, we must ask ourselves on what grounds is the agent making

choices. This paper investigates the interaction between market and consumer.

The topic of my paper can be easily resumed by this quote from Pierre Bourdieu's The

Social Structures of the Economy:

Only a very particular form of ethnocentrism, which assumes the guise of

universalism, can lead us to credit economic agents universally with the aptitude for

rational economic behavior, thereby making disappear the question of the economic and

cultural conditions in which this aptitude (here elevated into a norm) is acquired, and the

question of what action is indispensable if these conditions are to be universalized.

[2005, 5]

When he wrote this, Bourdieu referred to an economic sociological study on economic

behaviour in Algeria, where he found out that the community he studied, the Kabyles, thought of

work as a social occupation, not as an economic activity1. We cannot explain this difference by

relying on a divide in rationality, but as a distinct value (cultural utility, non-economic

motivation) transmitted through history. As for the French sociologist, my focus will be to

discuss about the motivational aspects of the economic behaviour, relating to concepts of

economic thought in their interaction with the much wider social reality (the social area of self-

1 A very thorough discussion about the myth of the archaic savage as a precursor of the economic man (individualistic behaviour) was given by Karl Polanyi in his The Great Transformation (1944). It is also useful to be reminded of the distinction made by Aristotle, in the introductory chapter of his Politics, between householding proper and money-making. Aristotle insists on production for use as against production for gain as the essence of householding proper, money being an exogenous accessory, production being accepted as an extra, as long as the household was self-sufficient.

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evidence): “the social dimension of the consumer must recover a more refined and articulated

place in the motivational structure of consumer decision procedures.” [Bianchi, 1998, 8]

Consumption, in economics, is the use of goods and services by households; consumption

expenditure, a distinct facet of it, is the purchase of goods and services for households. Both of

them are important factors to be considered in macroeconomics because aggregate consumption

directly affects aggregate savings – responsible for the production of a national supply of capital

- the total of what is not expended from one’s income. The necessity of discussing such a topic

manifests itself because consumption is at the heart of the economic account of practical

rationality. It expresses choices and decisions, intentions and plans, and sometimes can define the

motivation for outcomes. We will try to give a general picture of consumption by using

psychological, economical and philosophical inquiries. A central premise of this paper is that the

consumer's maximizing behaviour is not a constant capacity throughout time and we will try to

specifically discuss how our reasoning is adapting and takes into consideration choices that

never existed before, while discarding and replacing old preferences and tastes2. “Consumers do

not follow any consistent maximizing behaviour, but rather an adaptive pattern of choice”

[Gulaerzi, 1998, pp. 48-49]. A subsequent question is about how technical change and product

innovation translates into consumers decision procedures and how consumers subjectively

channel these changes so as to modify their tastes and preferences [Bianchi, 1998, 10]. My thesis

is indirectly sustained by the findings of Tversky and Kahneman (1986) on the framing effect in

decision theory, Herbert Simon's notion of satisficing and bounded rationality (1955), but also by

the Allais (1953) and Ellseberg (1961) paradoxes of preferences that violate expected utility

theory. The fundamental assumption of preference invariance was challenged from the inside of

economic theory. My own interest is in furthering such a critique of invariability, while

emphasizing the determinative nature of our social and commercial surroundings.

A fundamental question can be posed: why people consume more than they gain? John

Maynard Keynes assumed the principle of not consuming more than you gain as an implicit

psychological rule, and somewhat less strongly, that a part of the income is saved as the income

increases3. As we have seen in the recent economic crisis, this was an overstatement. But what

2 “The evidence of grave deficiencies in taste prediction appears to pose a significant challenge to many applicationsof the rational-agent model”[Kahneman, 2003, 165]

3 As stated by Milton Friedman in the introduction to his A Theory of the Consumption Function, Princeton University Press, 1957, p. 3.

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changed since then? Well, it is all about new products that flooded the market, as vacuum

cleaners, radios, TV's, computers, better cars, luxury products etc. and changed the definition of

what comfort meant [Cashman, 1989], thus exposing the agent to new possibilities of choice and

preferences4. As consequence, we may assume that consumption is not a stable function to be

observed independently from the cultural aspects of a certain period of time, otherwise

preferences for old products would have not disappeared in short spans of time (the transition

form rock'n'roll to pop was made in less than a generation, including the array of cultural

products that represented them, from the James Dean hairstyle to Andy Warhol). An unchanged

set of preferences is a break in the cycle of capitalist innovative production, where new products

are sent into the market to replace the old ones (novelty, surprise and discovery seem to be

beyond economic inquiry, but there is more to learn from them in capturing consumers’ desires).

Consumption is not just about demand, but also about creating products that can materialize

almost invariant values (i.e. the fashion industry survive because there is such a value called

beauty, transgressive over time, with a morphotic content, but also some invariable elements5-

i.e. the novelty of its designs). Even if we assume that this cycle is maintained only by the

limited lifetime/warranty of the products, we cannot explain why they are not replaced with the

same products and a new product is selected. An answer to this is given by Bianchi [1998, 2] :

novelty and surprise “are among the variables which, by generating changes in the stimulus

potential of a specific situation, are also responsible for how pleasurable, interesting and

rewarding the situation is perceived to be”. Utility functions can be attributed to the hedonic

content of new products, content which is relegated to the existing set of preferences. But in the

same time we can ask ourselves if an invariable set of preferences is not damaging the utility

4 We must question ourselves (though this is not the proper time or place) about the rationale behind the increasing in numbers of products thrown on the market, while a gap between rich and poor is constantly forming since the '70, thus limiting the buying power of the majority (the middle class is drawn towards the lower strata of income, not the higher). According to the U.S Census Bureau study for 2009 (available at :http://www.census.gov/hhes/www/poverty/data/incpovhlth/2009/index.html ), in North America, the poorest 20% receive 3,4% of GDI, while the richest 20% receive more than 50,3%. The richest 10% own 71,5% from the national treasure, while the rest of 90% own only 28,5%. The richest 1% own 33,8%, while 50%, half of the population(!) own 2,5%. It is not strange, then, to wonder how much really sovereign choice, according to endogenous preferences is and how much is emulation of reference groups (the next highest income groups).

5 I would speculate that values are similar in structure to the Aristotelian concept of non-coincidental homonym (no single definition will fit all the cases, but nevertheless they are not merely coincidentally related). In this case, values can be variant even when they still retain their basic content. As in any given syntax, the complex meaning of a word (not just its signified) is construed by the words that are connected with it. Even if we use the same word, we will still have different meanings; as such, a value can be holistic while retaining its atomic form, its focal meaning.

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potential of the consumption. If we think of a prize space in which old and new products (with

the same value margin) are the possible outcomes, would the consumer stick with his/her present

preferences, or would he be interested in “risking” for a new product? If we were to offer a new

product (i.e. an iPod touch) and an old one, but more expensive (i.e. a golden watch), as prizes in

a lottery, it wouldn't be certain which will be chosen by the agent. For knowing the result, we

should have different lotteries based on age, sex, education, place of birth etc. In the end, all this

would reveal us less homogeneity in the structure of utility, and more variables related to social

and cultural dimensions. If the novelty is perceived as a sharp disjunction between actual and

already experienced events, the agent sees it as distressing and threatening; a low degree of

novelty, being “repetitive and unchallenging, is also perceived as unpleasant”; but if the degree

of novelty is inducing a pleasure that rivals with the previous situations, the agent perceives it as

desirable [1998, 2]. Another possible answer is given by Georgescu-Roegen: “the fundamental

theoretical advance [...] is that consumption choice is better understood by shifting attention from

the satisfaction of a single want, utility, to a series of distinct wants, which are met sequentially

and by distinct commodities”[Gualerzi, 1998, 48, emphasis added]. An equilibrium point is hard

to be found, thus increasing the difficulty of assessing the variations (exogenous and

endogenous) to which the agent might respond to.

A full definition of the properties of the product requires an appreciation of the

relationship between its objective characteristics, both technical and formal, and the

inseparably aesthetic and ethical patterns of the habitus that structures the perception and

appreciation of it. It is this which defines the real demand with which producers have to

contend. [Bourdieu, 2005, 22]

We will have to deal with two things: we must find out if the ordering of preferences -

mental states - is paired with an equivalent ordering of values - non-mental6 as in generated by

something else than the agent - (the highest ranked preference is also the highest ranked value),

6 Pareto's concepts of “obstacles” and “tastes” are assuming an ability of differentiating between what is desired and what can damage/stop the fulfillment of the desire. The value of something can be directly related to the level of “rational desiring” (not instinctual). But the value of something is not coming from the desire itself, but from an external assessment of its feasibility (what can be done) and plausibility (the environmental response). If the desire is accepted by the society as harmful/unharmful to the society, then the desire receives a moral content, expressed as a “thin”(good/bad) or “thick”(obscene, altruistic, courageous etc.) value, as portrayed by Jonathan Dancy (2002). Values are also used to scale the relation between tastes and their desirability.

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or if value is a distinct form of preference ordering and if it can be used as a variable that can be

computed in the mathematical functions of consumer choice. It is all about investigating how

preferences are influenced by personal and social valuing. Adds like “just do it” - Nike, “life's

good” - LG, “like no other” - Sony, “I am what I am” - Reebok, are not just simple catchphrases,

slogans easy to remember, but values that are attached to their brands and public presence. A true

economics of the signs, where transactions are negotiated, searched and controlled, relating to

trust, commitment, competence and credibility; it defines a social space in the heart of

economics. When the slogan superpose on individual values, then a tendency of recognizing that

particular brand (provides a standardized meaning and this allows consumers to do away with

specialized external consultancy for ascertaining uses and quality) as close to the self-image7 is

born. The process can be also reversed, when the values expressed by those slogans are

compressed social values that can determine a yet unformed personal set: the amount of

knowledge one has directly influences the completeness and the ordering of the preferences set.

A poorly educated agent has a much more limited preference set and evaluating values of it than

an educated peer (a consequence of this discrepancy is the ways in which the agent is forming

his/her preference set, through education or by any means available in day-to-day life. The social

strata in which the agent is positioned exposes thus the agent to various influences. A Western-

European agent will have a complete different preference set than an Eastern-European and a

different way of acquiring it.). The idea of success, almost a moral imperative in our days, goes

hand in hand with the economic system and the principle of individual agency - rooted in the

Cartesian universalism of reason [Nelson, 1993]. The point I try to make is that the individual

choice is less bent on formal rational reasoning when the context is not construed in such a way

to transform the agent's choice in an important choice over the future. The goals of the consumer

can be sequential, never in a state of completeness as long as innovation can always alter the

actual set of preferences, diverting attention and awareness, and thus disclosing new

opportunities. Buying a pair of shoes is not going to change the agent's overall life, but it will

enforce and empower his/her self-image and self-esteem, while rallying his social positioning at

a higher status, one where a new feasibility set can appear. Underpinning such a position is the

assumption that rationality is a much wider and complex process than just being able to

7 I define “self-image” as the way in which the agent is perceiving itself, including preferences, values, attitudes, beliefs, and actions. This self image is based on the ability to remember and the ability to project and anticipate. Every action is ultimately reflected back on the agent's image of self, except when the agent is self-deceiving itself.

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reasonable justify one's actions and beliefs and to guarantee consistency between them.

Psychological variables as anxiety, pleasure, fear, anguish etc. are able to impose on decision

making without being irrational:

I conceive rational persons not as constantly reasoning, or as always

selfconsciously logical, in arriving at beliefs but rather as having in some sense

internalized rational standards which then guide them without the conscious thoughts one

might cite in explicitly rationalizing their behavior. This is not to deny that rational

persons must be capable of reasoning; the point is that reasoning is not the only

manifestation of our rationality nor a constant element in the formation of our beliefs.

[Audi, 2002, 33]

Choosing is an act that must be coherent and consistent with the self-image and values of

the agent. We must accept that even if the agent is not always formally rational (i.e. believing p

and non-p in the same time), there is a great deal of intrinsic rational management of the self-

image (self-handicapping, multiple intrapersonal equilibria, self-deceit, somatic responses to

unconscious elements etc., in other words, an autonomous self-regulating mechanism). How do

all these sum up together? What can we expect from inserting variability and social values in the

expected utility theory? For one thing, we can observe how the agent can be conditioned to

choose when a social environment is determinant and how vulnerable are his consumption

choices to the market system values. In a study from 2002, Self Confidence and Personal

Motivation, Roland Bénabou and Jean Tirole assigned three reasons why people may prefer

positive views of themselves: a consumption value – people might derive utility from thinking

well of themselves, a signaling value – if the agent believes that he has certain qualities it is

easier to convince others of their existence, and a motivation value – confidence in one's abilities

might “help the individual undertaking more ambitious goals and persist in the face of

adversity”. People “tend to overestimate their abilities and other desirable traits, as well as

the extent to which they have control over outcomes. They also rate their own

probabilities as above average for favorable future life events, and below average for

unfavorable ones; the more controllable these events through their future actions, the

more so”[2002, 874]. Even while retaining the assumption that individuals are rational

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information processors, we cannot ignore the shade it casts on the economic ability of foreseeing

market interactions.

What is important to keep in mind now is that as abundance and income rose over time,

a sense of security over toned the uncertainty of the future. Failsafe devices were created, as

credit loans, mortgages and other financial devices, but as the abundance grew, the mechanism

meant to protect the agent from bankruptcy became a mechanism for increasing demand, and

thus, production. This vicious circle defined and restricted preferences and goals over time. A

child in college or the sudden death of someone close is a hard strain over one’s possibilities.

These occurrences are defining consumption over time much more precisely than the placement

of new products. An analogous movement pairs up with the risks of life by creating new

preferences and goals over time. This is what I call morphogenesis of preferences. In more clear

terms, is about the variability of preferences over time. This variability is explained by a sort of

interactionist assumption over the agent's behavior, which argues that the agent is much more

sensible to trends and embedded social value rather than pure individual choice8. The paradox we

want to investigate is if these trends are formed due to social exposure (where x chooses y

because a, b, c choose y), or do they represent an aggregation of individual choices (x chooses y,

a chooses y, b chooses y, c chooses y ...n+1 chose y.). The matter is of asserting the generative

attribute of social choice and publicity in detriment to personal private choice. The emphasis

stands in the belief that a private choice is caused by personal practical reasoning when one is

able to discern between the merits of the products and the demagogy of advertising 9: “the person

reacts to the way in which options are presented, and not simply to their substantive content”

[Elster, 1985, 5] We have to keep in mind that “models of free individual choice are not adequate

to analyze behavior fraught with issues of dependence, interdependence, tradition and power”

[Ferber&Nelson, 1993, 6].

8 “But the consumer as producer is also engaged in a process of discovery, in being able to detect as well as to create new and favorable options. Hough market goods may already exist as inputs in consumption; still the output (or outcome) is not inscribed in them once for all, but is the result of multiple, as yet unknown, combinatory consumption possibilities. […] Consuming therefore implies also the production of novelty, the creation of opportunities for consumption to happen.” [Bianchi, 1998, 4]

9 We can't help ourselves but to wonder why so many commercials claim the #1 position in their business, even when they cannot provide any kind of justification for it. What is even more puzzling, while we assume that the agent is mostly rational and can make a difference (can he?) between empty advertising and reasonable advertising, the cliché has not disappeared. The agent is not interacting in a completely rational environment. The rationality of transactions is obscured by the irrational boasting of products.

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The act of buying products has been assimilated in the economic account of rationality as

a model for decision and choice theory. In the end, we speak about a type of instrumental action

that cannot be severed from the personality of the buyer. And this is true to some extent. But it is

not a constant, but rather a variable. As Amartya Sen clearly explains [1997, 745], every choice

with relevance to the maximizing behavior can have a particular importance because of two

reasons: process significance and decisional inescapability. What these two count for is that a

judgment may not be completed when the choice is made and that the choice itself is sensitive to

such aspects. In such cases, immediate needs might prevail over preferences (when the cash is

low or when the agent can buy only one type of product) and they may be accounted for as

revealed preferences from an observer of the market, even if the original menu of choices is

significantly reduced and different from the set of preferences. The immediate consequence is

that those products will continue to be in production if the demand is high enough, although they

are not a consequence of the agent’s preferences, but of the agent's income. Inescapably, that

would be the reasonable response from the market, indistinctly of the fact that the product itself

may be harmful for the agent’s wellbeing or for the environment. This is a problem of awareness

from the part of the consumer. There is never a group consumption (outside statistical aggregated

data of sociological and market analysis), only individual consumption and household

provisioning. As ascertained in the prisoner’s dilemma, the wellbeing of one agent may be

distinct from the wellbeing of the other agent, resulting in a “hawk” strategy. The existence of a

communicational closure is always compelling to a restrictive use of the agent‘s rationality and

to a restricted set of outcomes with a high degree of probability. This is where a distinction must

be made between “comprehensive outcomes” and “conditional preferences over culmination

outcomes given the act of choice” [1997, 745]. A comprehensive outcome is about all the factors

that define an outcome as a preferred outcome (responsibility, morality, desires, needs, status,

identity etc.) and are consciously recognized as principles of reflexivity. Every choice to buy a

product is transformed into a subjective action of appropriation to the agent’s property. That is to

say that even the legislative context (defending private property) is able to direct consumption

and formation of new preferences by ascertaining itself as a defining value for the agent. Of

course, this is part of the complexity of modern life and we should not be interested in the causes

for the preference of a product or another, but only in the relations of consistency and

justifiability that are assumed in the individual ordering of outcomes in such complex contexts. I

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want to challenge this view. If we think of publicity, it would be naïve to think of it only as the

publicizing of choice or product awareness, without admitting that its scopes are less directed

towards the agent’s use of rationality and more to his pocket. In the same time, economists are

trying to think of the agent as a rational being, even if he is convinced by not so reasonable

marketing campaigns. In his head, everything must make sense, they seem to say. Beliefs are

easy to change in less educated minds. In other words, the positivist approach to consumer

behavior is not capable to give a complex enough account of it. Because of this, it was often

viewed and criticized as reductionist.

The consumer must be distinguished from the customer [Statt, 1997, 5]. The former term

is more general and does not differentiate between the acquired goods and services, while the

latter implies a relationship over time with a product or a producer. It certainly is required to

emphasize that the customer has a very stable hierarchy of preferences and beliefs about the

products he is loyal to. Loyalty (without the implicit morality) is a double expression of, on one

hand, the characterization of the agent as a consumer with formed tastes and preferences over

time, the perfect statistical data for marketers, but in the same time it can express narrowness or

aversion to risk. This points to another paradox: publicity as a tool of persuasion (or

manipulation) tries to 1) preserve the existing customers; 2) transform undecided consumers into

customers; 3) convince customers to defect in their favor from other brands. This should make

clear that the agent’s choices and decisions are not the only volatile element in the market

society. The market itself, although under the regulation of rational agents, may give rise to

elements of indecision and uncertainty. Because of the abundance of products we enjoy today, a

choice does not seem to matter too much and to say very little about other products. We do not

know for sure if the markets of previous times, with a less vast array of products, would have

been much easier to be caught in the web of mathematical and rational assumptions of choice,

but we can surely say that the behavior of the consumer nowadays is much more complex

because of the vast array of choices he could make. Sometimes, indecision does not represent a

deficiency in the utility theory of the agent, but an overload of pre-established hierarchies.

Because of that we should acknowledge that preferences are constructed differently. For

example, having a pre-established set of preferences allows the agent to expect from the product

certain qualities and makes it easier for the agent to orient himself in a bundle of goods. In the

same time, previous products can construct a new set of preferences for future products of the

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same kind or diverse (ignoring new qualities or, expecting more). A large and ever-increasing

space of choices is requiring a bigger set of preferences or a bigger generalization of properties.

Is the agent able to keep track to all of them, and in the same time to justify them? This question

should not arise difficulties as long as we still keep in mind that not the cause of the choice is

important, but its positioning in the rationality of the agent. We do not ask why the agent chose

that product and not the other one 10(increasingly difficult when the products share a standard of

quality). We only ask if his utility requirements and preference ordering are satisfied by his

choice (conversely, if the product is able to represent one’s preferences).

There is a distinction between buying a product and a much more complex decision as to

what college to follow. In the former, the factors that accompany our choice are mostly external

and sensible: the recognition of the product, the repetition of its publicity, the type of attention

we have, the perceptive openness to the stimuli etc11. In the latter case, things are differently

perceived, in favor of the more psychological approach. In the first place, the importance of the

decision may mark the rest of the agent’s life. Because of this, the anxiety that may appear can

influence the decision. Every set of beliefs has its own relevance to the projected or desired

outcome. To hold the belief that a brand of shoes is better than another one is not the same with

holding the belief that Cambridge is better than Stanford. It is not about a constant preference,

“what I think it is best for me”. We must ascertain that there is nonlinearity12 that fundamentally

defines one’s decisions, and content of beliefs. When the decision to choose between Cambridge

and Stanford arrives, to implement the decision requires a comparative assessment of both

Universities and in the same time the actualization of preferences and beliefs of the agent

according to the process significance and “subject capabilities” [Sen, 1985]. Briefly put, the

input (preferences, beliefs) is also influenced by the probability of the output (the decision in

itself, the projected outcome plus the anxiety of the unknown) and the uncertainty of the outcome

is producing a psychological state of anxiety which influences many decisions due to the desire

to shorten that anxiety [Caplin&Leahy, 2005, 56].

10But it is a good question, because there are products that can be easily recognized in a bundle of goods. In the same time, there are many types of products: generic products – the core of the main market, basic goods; expected products –the generic attributes of the product plus the minimum expectations of it, like price, delivery etc; augmented products – the generic and expected attributes plus the attributes needed to differentiate the product from other products, like bonuses, free gifts etc; potential products – everything above plus, plus… [ Statt, 1997, p. 27]

11 Ibidem, pp. 47-49.12 Preference discontinuity makes it easier to discuss alternative systems of preferences, representing and

represented by differentiated life styles. [Sen, 1977]

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The Input/Output relation refers to communication between an information processing

system and the outside world. From a cognitivist point of view, we would not be mistaken in

asserting the information processing system as the rational agent, able to distinguish between

stimuli and to offer a response. Some basic representations of the I/O relation would be:

a) I ---> O, an input (I) is determining a response/outcome (O);

b) I---> O ---> I', a response (O) to a previous input (I) is determining a new input (I');

c) Iⁿ <=> Oⁿ, every input (I¹, I², I³...Iⁿ) is determining an output (O¹, O², O³...Oⁿ) and vice

versa.

To express the relation between goods and consumer, while acknowledging the change

variable in time and the agent's susceptibility to new informations, we will use the I/O notation

for the following example: John finds out that there are two more scholarships for Cambridge.

He decides to give it a try since he just finished his bachelor degree and has not decided yet on a

university, even if he applied to a few of them. Also, receiving some money would be nice, since

he wouldn't have to get a loan, even if his parents could support him. After sending the required

paperwork he starts to think that if he gets accepted (which is quite probable thanks to his good

grades and recommendations), Cambridge would be a very nice place to study, also considering

that most of his acquaintances recommended him to go there because of the family tradition, but

of which he did not really cared. And so, he grows impatient for an answer from the university.

Now, he wants to get accepted, and imagines himself walking on the corridors of the university.

[I ---> O] is changed over time to {F (t) [I + P (O)]} ---> (O’)

P represent the probability; O is the output/outcome estimated in the original input set I, and O’ is

the output considering a new desire emerged as a high degree of probability was wished for; O’

emerged through the chiasm of the original I and O exposed to new informations or passing of

time F(t). To the original O was added an expectancy that was not integrated in the original

probabilistic assumptions (new informations, mental states), but also a belief in adaptive

capacities (responsibility, consequences), and new risks, once P (O’) = 1. This is a model of how

expected utility can be extended by introducing anticipatory feelings, ultimately modifying the

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reasoning structure of the agent13. This case is possible for changes over time, when the

preference set is not complete and where new factors might shift the feasibility of the choice to

the desirability of it due to affective mental states with which the agent was not concerned at the

beginning, or the discovery of new grounds14 while explaining the initial beliefs. The concrete

implication of this is that the agent is not having full sovereign control over his/her decision.

The deliberation of the agent is concerned with a form of relief from the accumulated tension.

One of these forms of relief can be shortening the decision duration or delegating the decision to

someone else, or to renounce altogether to it. A pattern is difficult to protract as long as extra-

economic factors are determining the type of behaviour/preferences. Only when the good is

desired, it becomes valuable for the agent, thus implying that there is a distinct subjective

evaluation from the objective qualities of the object. In this sense, motivation is not about an

efficient pursuit of utility, but a drive to satisfy certain identity needs (self-actualization, as in

Maslow's pyramid, being at the top). This points out to the consumer as an active individual with

a directed behaviour towards needs satisfaction.

Individuals, however, pursue the realization of identity with respect to a

constantly changing world of commodities and the evolution of consumption alternatives

which that entails. In turn, this evolution is fed by the increasing sophistication of wants

above and beyond subsistence, which follows from the income growth, and by the

increasing refinement of the notion of individuality and social identity. Individuals strive

for identification within the social structure, bending towards their private aims the

system of commodities which at least partly develops along the path of change dictated

by industrial transformation. [Gualerzi, 1998, 54, emphasis added]

13 “We argue that the incorporation of anxiety into asset pricing models may help explain both the equity premium puzzle and the risk-free rate puzzle. Safe assets, by providing secure returns, may reduce anxiety even before final consumption takes place. They therefore provide an extra benefit in addition to the smoothing of final consumption across states, serving to reduce the risk-free rate. Stocks and other risky assets, however, by increasing the variance of the portfolio, tend to increase anxiety in the period before final consumption takes place. Hence owning stocks involves an extra cost in addition to increasing the variance of final consumption, which increases their required return.” [Caplin&Leahy, 2001, 56]

14 “If we are asked why we believe something, reasons may occur to us that represent, not identifications of already tacit grounds on which we (inferentially) believed the proposition, but discoveries of new grounds.”[Audi, 2002 34]

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There are two simple ways to determine what the inhabitants of a poor neighborhood

want: you can analyze what the buy, by aggregating every choice, knowing their income and

determining patterns or you can just go into the suburbs.

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