Four Laws of Consumption

Scientific knowledge can be distilled into a set of laws that are sufficiently general and robust to be useful in describing and predicting behaviour – the behaviour of physical objects (the orbits of the planets, for example), invisible forces (electricity), economies (why some prosper and others l...

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Bibliographic Details
Published in:The Economic record 2019-09, Vol.95 (310), p.358-385
Main Author: Clements, Kenneth W.
Format: Article
Language:English
Subjects:
Behavior
Consumption
Demand curves
Economic models
Electricity
Human capital
Price elasticity
Prices
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Summary:Scientific knowledge can be distilled into a set of laws that are sufficiently general and robust to be useful in describing and predicting behaviour – the behaviour of physical objects (the orbits of the planets, for example), invisible forces (electricity), economies (why some prosper and others languish) and people (education as deliberate investment in human capital). This paper identifies four empirical regularities in consumption behaviour that are sufficiently general and pervasive to qualify as ‘laws’: Engel’s law; the law of demand (the downward‐sloping demand curve); quantities more dispersed than prices; and the ‘law’ of -12 for price elasticities. In each case, I survey previous research, use international evidence to illustrate the workings of the laws and demonstrate their practical use.
ISSN:0013-0249
1475-4932
DOI:10.1111/1475-4932.12491