WRONG! Even though if we just analyze this point from a pure microeconomic theory we can expect that an increase on income, if you are dealing with normal or luxury products, could be followed by an increase on demand. When we focus on real live we’ll see that this is not always true, due to the fact that decision making on humans is “almost unpredictable”.
When we decide to buy - or not - something a big number of factors get into the scenery, and those factors usually don’t follow economic theories!
What makes a person to buy a product “A” instead of “B”? What helps on the decision of buying now or wait a bit? How tell us the amount of units really needed? What makes us spend more money on a product that the one that we really were planning to use?
Rationality? I might say that usually the “lack of it” is our counselor.
We can use our credit cards feeling that “someone else” will be paying for that debt; but when the bill appears we crash against reality.
How many times we went to a supermarket just to buy a couple of things and we end up buying a lot of unneeded products?
On the other hand, how many times we were waiting to have some extra money to buy something that we liked a lot and when that time appears we just decide not to do so?
Or maybe we prefer to save - just in case - instead, so our level of consumption decreases.
Reasons? A big number of them. Why? Who really knows!
Till my next post!
Prof. Lic. Fernando Julio Silva, MSc.
APRIL 2009
When we decide to buy - or not - something a big number of factors get into the scenery, and those factors usually don’t follow economic theories!
What makes a person to buy a product “A” instead of “B”? What helps on the decision of buying now or wait a bit? How tell us the amount of units really needed? What makes us spend more money on a product that the one that we really were planning to use?
Rationality? I might say that usually the “lack of it” is our counselor.
We can use our credit cards feeling that “someone else” will be paying for that debt; but when the bill appears we crash against reality.
How many times we went to a supermarket just to buy a couple of things and we end up buying a lot of unneeded products?
On the other hand, how many times we were waiting to have some extra money to buy something that we liked a lot and when that time appears we just decide not to do so?
Or maybe we prefer to save - just in case - instead, so our level of consumption decreases.
Reasons? A big number of them. Why? Who really knows!
Till my next post!
Prof. Lic. Fernando Julio Silva, MSc.
APRIL 2009
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