Consumer Confidence and Consumption: A Disaggregated Analysis

36 Pages Posted: 16 Jul 2006

See all articles by Solange Leproux

Solange Leproux

ISAE, Istituto di Studi e Analisi Economica

Marco Malgarini

ISAE, Istituto di Studi e Analisi Economica

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

Leproux, Solange and Malgarini, Marco, Consumer Confidence and Consumption: A Disaggregated Analysis (April 2006). ISAE Working Paper No. 65, Available at SSRN: https://ssrn.com/abstract=915349 or http://dx.doi.org/10.2139/ssrn.915349

Solange Leproux

ISAE, Istituto di Studi e Analisi Economica ( email )

Piazza dell' Indipendenza 4
I-00185
Italy

Marco Malgarini (Contact Author)

ISAE, Istituto di Studi e Analisi Economica ( email )

Piazza dell' Indipendenza 4
I-00185
Italy