Consumer Confidence and Consumption: A Disaggregated Analysis
36 Pages Posted: 16 Jul 2006
Date Written: April 2006
Abstract
The aim of the paper is to evaluate the relationship between consumers' climate and consumption, looking - respectively - at income-based indicators of confidence and at consumption expenditures disaggregated by durability. We find that confidence significantly contributes explaining consumption behaviour, especially when service expenditures are considered in the analysis: we interpret this result as an evidence that services are discretional, not strictly necessary expenditures, that may be influenced by the willingness to buy, as was originally suggested by Katona (1951) with reference to durable goods.
Moreover, confidence calculated for the poorest people in the the ISAE sample is found to have a particularly strong relationship with consumption, confirming the recent Souleles (2004) hypothesis that it is especially the opinion of some group of individuals to influence consumption patterns.
Note: Downloadable document is in Italian.
Keywords: Confidence climate, consumption theory, heterogeneous behaviour
JEL Classification: E21, E32
Suggested Citation: Suggested Citation