What Is the Consumer Theory?

Consumer theory focuses on the impact of consumer behavior standards and goals on visible demand. Gossen, Jevons, and Valla proceeded from utility maximization to define consumer demand, developed consumer theory for the first time, and then further detailed discussions by Marshall. In 1915, E. Slutsky proposed a series of properties to maximize the demand for utility, J.R. Hicks, R.G.D. Allen, Houtling, Wald (A. Wald) and others from 1934 to 1944 followed the work of Slutsky in-depth research. The basis of utility theory has been deepened in several ways: Fisher (l. Fisher, 1892) and Pareto (V. Pareto, 1909) replaced ordinal utility with ordinal utility; R. Frisch (1932) and Alt (F. Alt, 1936) proposed the axiomatic treatment of cardinal utility; Samuelson (1938) proposed explicit preference. ^[1]

Consumer theory

Consumer theory studies the laws of consumer behavior, and its focus is on consumer choice theory. Consumer theory includes:

Utility refers to the satisfaction that consumers receive from consuming goods, and is the subjective evaluation of consumers on goods.

Utility theory is used to analyze how consumers choose between products that meet different needs of people, for example, how consumers choose between cotton and bread. Utility theory is not used to analyze how consumers choose between products that meet the same needs, such as how consumers choose between bread A and bread B, because the value of analysis at this time is very limited. The choice between products that meet the same needs is much better with a usefulness theory.

Utility score

Usefulness refers to the ability of a commodity to meet a consumer's needs. Product usefulness is the objective ability of the product itself, which can be accurately measured using scientific methods such as physics and chemistry.

Usefulness is used to analyze consumer choices between products that meet the same needs. For example, usefulness can be used to analyze which one of the two breads is better for the consumer, and to analyze which one is better for the two garments. Usefulness cannot be used to analyze the consumer's selection behavior between goods that meet different needs of people, because the usefulness of goods that meet different needs of people is not comparable. For example, usefulness cannot be used to analyze which consumer would choose which one bread and one cotton coat would be better.

The level of usefulness can be compared between products that meet the same needs, and the usefulness is not comparable between products that meet different needs.

Usefulness is divided into cardinality usefulness and ordinal usefulness.

Cardinal usefulness means that the usefulness of a commodity can be represented by a quantity. For sugar cane, for example,

Consumer demand is divided into two different concepts: consumer effective demand and consumer actual demand.

(A) the effective demand of consumers

Consumers' effective demand (referred to as consumer demand) refers to the quantity of goods that consumers are willing to buy at a certain price. For example, for a certain consumer, if the rice is 3 yuan / hour and the consumer is willing to buy 1 catty per day, then the effective consumer demand for rice is 1 catty. And when rice is 5 yuan / pound, consumers are willing to buy 0.7 kg.

(I) Consumers choose between products that meet different needs

For example, a cotton coat costs 10 yuan a piece, and a bread costs 2 yuan a piece. Consumption of the first, second, and third cotton coats is 20, 10, and 3, respectively. The utility of consuming the 1st, 2nd, 3rd, and 4th bread is 7,5,2,1. How will consumers spend a total of 26 yuan?

At this point, the consumer will buy 2 cotton coats and 3 breads. At this time, the consumer has spent all the money and achieved the maximum utility44. At this time, it cost 10 yuan to buy the last cotton coat and get 10 utilities, 1 yuan to buy 1 utility, and 2 yuan to buy the last bread to get 2 utilities, and the last 1 yuan also reached 1 Utility.

And rights, consumer sovereignty

Consumer interest refers to all the economic benefits that consumers should enjoy. Economic interest is an important content of interest theory research. In addition to economic interests, there are also political interests, environmental interests, and security interests. Western economists believe that "interest" in economics and even social sciences is "one of the most central and controversial concepts". "When it comes to individuals, this concept has a very broad meaning from time to time, including The interests of reputation, glory, self-esteem, and even the interests behind them are, at other times, completely limited to the competition for economic benefits. "Consumer interests are the multiple interests involved in the above. Constituted. As far as the economic benefits of consumers are concerned, its constituent factors are also multifaceted. For example, product cost factors (production costs, transaction costs), product price factors (price-setting methods and product price levels), product quality and functional factors (high and low quality and functions, and whether they are complete), product service factors (attentive and convenient service) ), Product and service selectivity factors, and product safety factors, etc., are all factors that affect consumers' economic interests. In other words, the above factors will directly affect the economic benefits of consumers, that is, the economic welfare of consumers. Under the conditions of a market economy, conflicts of interest between multiple market entities exist objectively, and various market entities will intentionally or unintentionally harm the economic interests of consumers. In order to obtain more economic benefits for themselves, producers or operators often consciously or unconsciously ignore the interests of consumers, and often even harm the interests of consumers. In this way, the problem of protecting the interests of consumers has arisen. However, there must be a basis for protecting the interests of consumers. The basis is the rights of consumers. Therefore, consumer rights have become the prerequisites and guarantees for consumer interests.

Consumer rights refer to the rights that consumers should have for their own material interests, that is, consumer rights. At the same time, consumer rights are also the manifestation of consumer interests in market rules or in law. The object of consumer rights protection is consumer interests. At the same time, consumer rights are also an important means of protecting consumer interests. In market economy countries, consumer rights clauses are generally established in relevant rules of the market economy (for example, in the rules of market transactions), and many countries have established consumer rights in the form of laws. In other words, consumer rights are the rights determined by the market economy system and the legal system. They are the concrete expression of the basic rights of citizens in economic activities. They are protected by the national economic system and laws. Therefore, any behavior that damages the rights of consumers (essentially consumer interests) is an illegal and illegal act that is not allowed by national systems and laws. We can use legal methods to sanction the subjects who violate consumer rights. Consumer rights are determined according to the need to protect consumer interests, and the content of consumer rights is different at different stages of historical development. For example, on March 15, 1962, US President John. The "Special State of the Union Address on Consumer Protection" submitted to Congress by Kennedy for the first time suggests that consumers should enjoy 4 rights: the right to obtain safe goods, the right to know the goods correctly, and the right to choose goods freely The right to make comments and suggestions on related matters. In 1969, US President Nixon also stated that consumers have the right to demand appropriate compensation when their personal or property is damaged, that is, consumers' right to claim compensation. With the rapid development of the social economy, on the one hand, the specific content of consumer rights has been continuously enriched and improved, on the other hand, consumer rights have gradually been determined by the government and developed by both government systems and laws. Therefore, consumer rights The guarantee conditions are becoming more complete and stricter.

Consumer rights and interests refer to the rights and benefits that consumers should enjoy when purchasing, using goods or receiving labor services in a series of life consumption processes in order to maintain their survival and development. Consumer rights and interests are the unity or integration of consumer interests and consumer rights, and it reflects the rules or norms of the economic interest relationship between producers and operators and consumers. Consumer rights and interests are the criteria for the proper handling of the economic interests of producers and operators and consumers, and careful implementation of consumer rights and interests is an objective requirement for the normal and orderly operation of the market economy. If the rights and interests of consumers are violated, the market economy will deviate from the normal and orderly track, and the consequences of chaotic economic order will occur. Due to the diversity and variability of consumer consumption activities in the process of consumer consumption, the content of consumer rights and interests is multifaceted and constantly evolving. For example, after US President Kennedy first proposed four rights for consumers in 1962, the US President in 1969 also filed claims for consumers. On April 9, 1985, the United Nations passed the Guidelines for Consumer Protection, proposing eight rights for consumers: (1) the right to obtain necessary goods and services to survive, and (2) the right to fair prices and choices. , (3) the right to security, (4) the right to sufficient information, (5) the right to seek advice, (6) the right to fair compensation and legal aid, and (7) the right to consumption (8) The right to enjoy a healthy environment. The Consumer Rights Protection Law of the People's Republic of China, which came into effect on January 1, 1994, stipulates that consumers should enjoy nine basic rights and interests: (1) those who are not harmed in terms of personal and property when purchasing and using goods and services; Rights; (2) the right to know the true situation of the goods or services they purchase or use; (3) the right to choose goods or services independently; (4) the right to fair dealing; (5) the right to purchase, Those who use goods or receive services and suffer personal or property damage shall have the right to receive compensation in accordance with law; (6) the right to establish social groups that protect their legitimate rights and interests in accordance with the law; (7) enjoy the knowledge of consumption and consumer rights (8) the right to respect their personal dignity and national customs when purchasing, using goods and receiving services; (9) the right to supervise the work on goods and services and protecting the rights and interests of consumers. It can be said that this is the most complete statement of consumer rights at present.

Consumer sovereignty refers to consumers' ultimate decisive role in the economic activities of production and business operators. It can also be said that in the process of social production and reproduction, it is not the producers themselves but the consumers that ultimately determine the basic economic issues such as what and how much is produced. Consumer sovereignty is a theory first proposed by western economists, also known as consumer domination theory. In Western economics, consumer sovereignty or consumer domination refers specifically to the basic economic issues such as what and how much a consumer produces in a market economy, and ultimately plays a decisive role. In fact, Marx already pointed out this effect when discussing the reaction of consumption to production. Therefore, both Marxist economics and Western economists believe that consumer sovereignty or consumer domination is actually a key factor in organizing production under the conditions of a market economy. This is indeed the case. Every consumer buying goods or services means voting with a "currency ballot" that he or she owns, indicating their needs and choices for various goods or services. Producers who choose to enter the consumer sector and withdraw from the circulation process can continue to produce these commodities; goods that consumers do not accept are stranded in the market and are useless, and their producers can only lose money until they go bankrupt. Consumers did play a decisive role in this process. In this way, the "money ballot" for consumers to purchase goods or services not only indicates the direction for the production and management of products produced by the production operator and its structural adjustment, but also provides incentives for the production operator to carry out production and operation activities. The fundamental reason lies in the consumer's "money ballot", which can create opportunities for continued production of goods suitable for consumer consumption needs and bring profits to the producers and operators of such goods.

The theory of consumer sovereignty is an organic part of market theory and market economy theory, and it reflects the basic laws of the operation of market economy. Classical liberal economists have already seen that consumer sovereignty is an inevitable result of the commodity economy. Because under the condition of the commodity economy, the producer produces the use value in order to realize the monetary value of the commodity. In order to realize the monetary value of goods, production must be carried out according to consumer needs and preferences. Classic Marxist writers also emphasize the important role that consumption plays in production, pointing out that production depends on consumers' needs and preferences under certain conditions. Under the conditions of a market economy, the market exchange activities and consumption activities in the operation of the market economy are mainly carried out by consumers, that is, caused by consumer consumption needs and driven by consumer life consumption activities. It further started the reproduction process of social production. Therefore, the market economy must not only be based on the premise of consumer sovereignty, but also be directly reflected as a consumer sovereign economy.

The establishment of a consumer sovereign economy has given consumers the necessary rights and interests. This has created consumer rights issues. Therefore, the theory of consumer sovereignty provides a theoretical basis for valuing consumers, consumer demand, and protecting consumer rights. It shows that the reason why we attach importance to consumers, consumer needs and protection of consumer rights and interests is because consumers play a decisive role in the basic economic issues of social production in the operation of the market economy. Without the consumer's consumption behavior and the role of "money votes" in the exchange and consumption activities, the social reproduction process cannot be started, and there will be no market economy operation. From this point of view, the theory of consumer sovereignty is of great significance to fully grasp the theory of the market economy and use it to guide the development of the market economy. At the same time, the theory of consumer sovereignty also requires us: first, production and business activities should make decisions based on consumer needs and changes; second, the government should take the fundamental interests of consumers as a starting point to properly handle various complex Economic relationship. Only in this way can the normal operation and development of the market economy be promoted.

6. Some scholars' opinions

In consumer choice theory, there are three basic questions that need to be seriously considered and answered:

A, is the utility function a single objective function? B, is the marginal utility 0 when the maximum is satisfied? C, is the marginal utility diminishing?

Western economics gave affirmative answers to these three questions, or gave affirmative assumptions. Consumers in reality have given negative answers. As a result, the consumer theory of Western economics has become a theoretical castleit's perfect, but ridiculous and useless.

First, the utility function is a single objective function? From the perspective of "top-level design" to analyze consumer choice behavior and construct consumer choice theory, the question we need to ask is: Is there a single-purpose utility function for consumers? That is to say, what consumers want most is maximization of utility, but is this utility function a single objective function?

For example, Zhang San is a consumer. Zhang San has two needs, eating saturated and warming. Therefore, Zhang San's utility function may be maxU, where u = {u1 (x1), u2 (x2)} is a 2-dimensional vector. Instead of maxU, where u = f (x1, x2), u is a real number.

From a practical perspective, consumption is the pursuit of multiple goals to maximize utility at the same time. It's not about maximizing a single goal (that is, maximizing utility in common economics textbooks).

2. When the maximum is satisfied, is the marginal utility 0? Existing major economics textbooks tend to tend to zero marginal utility when consumer satisfaction is greatest. However, in real life, there are not many cases where the marginal utility is zero when the maximum is satisfied, and there are almost no cases. Personally, I think that when the maximum is satisfied, the marginal utility is often negative.

For example, when a person drinks 4 glasses of water, the marginal utility of the 5th glass of water is negative-drinking too much water is not good for the body. The marginal utility brought by the fourth glass of water is positive. The fourth glass of water is good for the body.

3. Diminishing marginal utility? Diminishing marginal utility is often an important assumption in economic theory. The question is whether diminishing marginal utility is also a question that is questionable. Has anyone ever proven that marginal utility must be diminishing? Marginal utility can't be increased or not changed?

Everyone does feel different when drinking water, but is it reliable? For example, a cup needs to be filled with 100ml of water, and 10ml is poured in at a time. Each 10ml works the same.

I personally believe that to construct the theory of consumer choice, we must give priority to answering the above three questions. Western economics gave affirmative answers to the above three questions, or gave affirmative assumptions. But in fact, consumers in the real world have given negative answers to the above three questions.

In real life consumers, he pursues multi-objective utility maximization. The marginal utility when his utility is maximized is negative. The marginal utility when he consumes goods does not necessarily decrease.

The consumer of Western economics pursues the maximization of the utility of a single objective. The marginal utility is zero when his utility is maximized, and the marginal utility is diminished when he consumes goods.

Consumer theory in Western economics: A theoretical aerial cabinet Western economics has made far-reaching judgments or assumptions on consumers. As a result, the consumer choice theory of western economics has become an aerial cabinet. It is useless and can never guide practice.

Anyone who has learned the theory of consumer choice in Western economics will have a deep feeling that the theory of consumer choice in Western economics can never be used in practice, and it can never be used to guide production and life. Perhaps it was never intended to guide practice.

V. Consumer theory of western economics: a combination of subjective idealism and subjectivism. Economics has been studied for a long time, and Mengel, Jevons, Hicks, Pareto, Marshall, Fisher, Sa The subjective idealism and subjectivism of western economic theories represented by Mulson and Friedman are too strong.

They first think that people's overall feelings are the source of consumer behavior (this is a typical subjective idealist approach), and then they think that the marginal utility is diminishing and the marginal utility is 0 when the utility is maximized (this is a typical subjective approach) . Finally, Western economists combined subjective idealism and subjectivism to construct a theoretical building for western economics to explain consumer behavior, and persisted in using the theory to mislead the world.