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100 Hot Consumer Behavior Essay Topics

In this article you will find a brief overview of consumer behavior research and consumer psychology examples as well as a practical guideline on how to write an essay on consumer behavior. Most importantly, this article will provide you with 100 hot consumer behavior essay topics that will make choosing a topic so much easier for you. This list is a real gem if you are looking for:

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Consumer Behavior Research

Consumer behavior is social science that involves marketing, psychology, sociology, ethnography, behavioral economics, and anthropology. The concept of consumer behavior involves intentions, decisions, and actions connected with purchasing goods and services, using them, and disposal activities. In essence, any behavior associated with purchasing anything can be considered as consumer behavior.

When we investigate consumer behavior, the topics of research include, but are not limited to:

• Motives of purchase
• Impact of the society/social group on purchase intentions
• Usage rates
• Possibility of repurchase
• Word of mouth
• Ethnographic factors of consumer behavior
• Methods of impacting and predicting consumer behavior
• Consumer decision styles
• Role of emotions in consumer behavior
• Customer loyalty

Consumer Psychology Examples

In the market environment, customers seek to purchase goods and services to meet their needs, while sellers strive to develop marketing strategies that would be the most impactful in motivating consumers to buy. That being said, marketing strategies are often designed to make the product more appealing to customers by influencing emotions and feelings.

Consumer psychology examples include the ways in which marketing campaigns influence consumer behavior. Appealing to customers by making a marketing campaign touching, emotional, or funny, are all examples of consumer psychology.

Let us consider several examples of consumer psychology, both good and bad, to get a better understanding of how marketing manipulates feelings of customers.

• Successful consumer psychology example

Procter & Gamble’s “Thank you, Mom” Campaign is emotional and strong, focusing on how mothers support their children no matter what. This campaign was tied to the 2018 Winter Olympics and promoted inclusion, diversity, and family values.

• Consumer psychology failure example  

One of the most notable marketing failures of the 2010s is, without a doubt, Pepsi commercial in 2017 . The ad exploited unity, freedom, and diversity as a way to communicate to every customer, depicting a carbonated soda as an element equally important as protest, democracy, and equality. An attempt to manipulate customer feelings was so obvious that the ad was taken down after a severe backlash.

How to Write an Essay on Consumer Behavior: Outline

Generally, just about any essay includes 3 major parts, namely introduction, body paragraph, and conclusion . Whichever of the hot consumer behavior essay topics you choose and whatever length your essay is, you can use the following outline to construct a logically structured essay that will engage your readers and will reflect your topic to the full.

1. Introduction

• Hook – the first sentence or two in your introduction that grabs readers’ attention. Can be a quote, relevant statistical data, interesting fact about your topic, a question, or a strong statement. Hook is like a good ad campaign – it sells the rest of the essay to your readers and motivates them to continue reading. Hook also demonstrates your skills of presenting your topic of choice
• Presentation of the topic – reveal what you will write about. Make sure to be clear and concise
• Topic background – reveal the general perspective in which you will research specific concept or phenomenon
• Thesis statement – a sentence that contains the main idea of your essay
• Transitional hook – typically the last sentence in an introduction that smoothly connects the introduction with body paragraph. Refer to what you will write about in the body paragraph to bridge the introduction with the rest of the paper

2. Body paragraph – the number of body paragraphs can vary depending on essay length, while their general structure and elements are uniform

• Topic sentence – reveal in the nutshell what the paragraph is about
• Details about the sub-topic , such as statistical data, findings from relevant and credible sources, interim conclusions, etc.
• Concluding sentence – summarize the paragraph
• Transition sentence – ensure logical transition between body paragraphs. Concluding and transition sentences can be merged into one sentence.

3. Conclusion – summary of your essay. Don’t simply rewrite your main findings, but reveal them in logical sequence, demonstrating connection among facts, cause and effect relationships, and concepts. Restate your thesis statement with regard to the findings you write about in your body paragraphs.

How to Research Consumer Behavior

Here is a list of 7 unconventional sources of information about consumer behavior that will help you find out more about your chosen topic:

• Customer review websites and customer reviews for different products
• Conduct a survey on survey website, such as Survey Monkey
• Interview your friends, family, or basically anyone you would like to
• Social media pages of brands and customer comments on them
• Blogs on products and brands
• Newspaper articles on market trends
• Your own experience – you are a customer and your opinion is a source of information that matters

Consumer Behavior Essay Do’s and Don’ts

• Research your topic in various sources
• Outline your essay before writing
• Reconsider thesis statement after writing every body paragraph
• Don’t simply paraphrase thesis statement in conclusion, but restate it with regard to information you’ve researched in body paragraph
• Make introduction and conclusion clear and concise, optimal length for each is around 10% of the essay
• Use citations not only to avoid plagiarism, but to demonstrate your dedication and hard work researching your topic
• Write your introduction after completing the body paragraph and conclusion – this is a secure way to write an introduction that represents your paper in the best way possible because you know what the paper is about
• Proofread your essay to make sure you avoid grammar mistakes
• Rely solely on your opinion, opinions of your interviewees, or results of a survey if you conduct one – it is unprofessional and you will most likely miss a lot of aspects of the topic
• Write lengthy intros and conclusions – your intro is supposed to intrigue and interest, while conclusion remind of major points rather than include actual research
• Avoid topic sentences – these are important elements of essay structure
• Ignore coordinating thesis statement after writing the paper – it can turn out to be out of touch with your body paragraph content

The topics below are designed to be versatile, interesting, topical, and truly compelling for essays, presentations, assignments, and projects.

Let’s get started!  

• Influence of price on consumer behavior
• Price change and consumer behavior in luxury goods market
• Customer luxury value perception
• Mass marketing of luxury and consumer behavior
• Prestige-seeking consumer behavior
• Customer behavior and marketing strategy in luxury segment
• Review and analysis of successful/unsuccessful examples of marketing strategies in luxury segment
• Self-concept in consumer behavior
• Symbolism and market behavior
• Impulsive purchasing
• Attachment and consumer behavior
• Cross-cultural consumer behavior
• Cultural dimensions and consumer behavior: the role of indulgence
• Convergence and divergence in consumer behavior
• Greenwashing as a marketing strategy
• Consumer reaction to “green” brand claims
• Current problems in consumer behavior
• Consumerism as a form of consumer behavior
• Risk taking in consumer behavior
• Consumer value and consumer behavior
• Consumer behavior trends in online shopping
• Sensory marketing and consumer behavior
• Consumer perception of price
• Consumer perception of quality
• Brand extensions and brand relatedness
• Mainstream vs trendy products and consumer behavior
• Personal values and consumer behavior
• Word of mouth and electronic word of mouth as a factor influencing consumer behavior
• Brand ambassadors and consumer behavior
• Corporate social responsibility as a factor influencing consumer behavior
• Brand image and consumer behavior
• The role of customer trust in consumer behavior
• The impact of negative online reviews on product perception and purchase intention
• The role of social media peer communication in shaping consumer behavior
• Is consumer behavior rational?
• The role of value maximization in consumer behavior
• Maslow’s hierarchy of needs and consumer behavior
• Impact of prior experience on purchase intention
• Neuromarketing in consumer behavior
• Neuromarketing and ethics
• The role of aesthetic taste in consumer behavior
• Customer retention methods
• Effects of sexual advertising on consumer purchase intentions
• The role of packaging in consumer purchase intention
• Brand sustainability as a positive factor of consumer purchase intention
• Product placement and its effect on consumer behavior
• Innovations as a factor influencing consumer behavior
• Color-emotion associations
• Pink for girls, blue for boys: gender differentiation of children’s’ goods
• Marketing power of emotions
• Emotions and brand attitude
• Measures of purchase intention
• Customer satisfaction measures
• Customer satisfaction and customer loyalty
• Customer loyalty and repurchase intentions
• Brand familiarity and purchase intention
• Smartphones, e-waste, and disposal activities
• How fast fashion brands attract customers
• Perceived quality and purchase intention
• Organic food customer perception
• Purchase intention and celebrity endorsements
• Social media influencers and consumer behavior
• Do customers care about business ethics?
• Purchase intention and controversial products
• Consumer animosity
• Impact of the country of origin image on consumer behavior
• Determinants of purchase intention
• Repurchase intention in services
• Customer satisfaction and repurchase intention
• Consumer clothing disposal behaviors
• Personal factors of consumer disposal tendencies
• Masstige brands and consumer behavior
• Brand advocacy development
• Customer relationship management trends
• Purchasing power and consumer behavior
• Economic conditions and consumer behavior
• Education level of consumer behavior
• Consumer decision style overview
• Hedonistic decision style
• Brand-conscious customer choice
• Social status and consumer behavior
• Impact of sales associates on consumer purchase intention and behavior
• Product life cycle and consumer behavior
• New product adoption types
• Factors that cause brand-switching
• Online consumer behavior types
• Guerilla marketing and consumer behavior
• Concept of brand awareness and its impact on consumer behavior
• Impact of the Internet on buying process
• Perfectionist consumer decision style
• Behavior of a healthcare customer
• Consumer behavior of Generation Y
• Shopping behavior of baby boomers
• Generation Y vs Baby Boomer consumer behavior
• Brand loyalty of Millenials
• Brand awareness and social media
• Generation Z consumer behavior
• Future consumer trends 2020
• Situational variables and consumer behavior
• Methods of predicting consumer behavior

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Consumer Behavior Research Paper Topics

Consumer behavior research paper topics are essential to students studying this field. This comprehensive guide from iResearchNet provides a comprehensive list of consumer behavior research paper topics divided into 10 categories, expert advice on selecting a relevant topic, and a step-by-step guide on writing a successful research paper. Additionally, iResearchNet offers writing services with expert degree-holding writers, custom written works, in-depth research, custom formatting, top quality, customized solutions, flexible pricing, short deadlines, timely delivery, 24/7 support, absolute privacy, easy order tracking, and a money-back guarantee. By following the expert advice provided and using iResearchNet’s writing services, students can produce high-quality research papers that make meaningful contributions to the field of consumer behavior.

Understanding Consumer Behavior Research

Consumer behavior research is an essential field of study that explores the processes and activities that individuals undertake when making decisions related to purchasing goods and services. This field is particularly important for marketers, advertisers, and sales professionals who seek to understand how consumers make purchasing decisions and how they can influence these decisions.

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For students studying consumer behavior, research papers are a common assignment that require them to explore various topics related to this field. However, selecting a relevant and feasible research paper topic can be challenging. Furthermore, writing a successful research paper requires attention to detail and adherence to academic standards. This comprehensive guide from iResearchNet is designed to assist students in selecting appropriate consumer behavior research paper topics and providing expert advice on how to write a successful research paper. The guide also provides information on iResearchNet’s writing services, which offer students a valuable resource for producing high-quality research papers that meet the academic standards of their instructors. By following the guidelines and using iResearchNet’s writing services, students can produce research papers that make meaningful contributions to the field of consumer behavior.

100 Consumer Behavior Research Paper Topics

Consumer behavior research encompasses a wide range of topics, each of which explores different aspects of how individuals make decisions related to purchasing goods and services. Here are ten categories of consumer behavior research paper topics that students can consider when selecting a research topic, along with ten sample topics for each category:

Perception and consumer behavior:

• The impact of package design on consumer perception of food products
• The effect of product display on consumer attention and purchase intention
• The role of brand familiarity in consumer perception of luxury goods
• The influence of product color on consumer perception and behavior
• The effect of music in advertising on consumer perception and recall
• The impact of celebrity endorsement on consumer perception of products
• The effect of font type on consumer perception of brand personality
• The role of scent in retail environments on consumer behavior
• The influence of product label claims on consumer perception of health and wellness
• The impact of product design on consumer perception of eco-friendliness

Motivation and consumer behavior:

• The influence of brand personality on consumer motivation to purchase
• The role of scarcity in marketing on consumer motivation and behavior
• The impact of rewards and incentives on consumer motivation and loyalty
• The effect of social proof on consumer motivation to purchase
• The influence of emotions on consumer motivation to purchase
• The role of self-congruity in consumer motivation and brand preference
• The impact of brand trust on consumer motivation to purchase
• The effect of personalized marketing on consumer motivation and engagement
• The influence of product involvement on consumer motivation and purchase intention
• The role of value perception in consumer motivation and price sensitivity

Attitudes and consumer behavior:

• The impact of brand image on consumer attitudes and loyalty
• The role of social responsibility in consumer attitudes towards brands
• The influence of culture on consumer attitudes towards luxury goods
• The effect of perceived risk on consumer attitudes and behavior
• The impact of celebrity endorsement on consumer attitudes towards products
• The role of nostalgia in shaping consumer attitudes towards brands
• The influence of brand authenticity on consumer attitudes and behavior
• The effect of word-of-mouth communication on consumer attitudes and behavior
• The impact of service quality on consumer attitudes and loyalty
• The role of price perception in shaping consumer attitudes towards products

Learning and consumer behavior:

• The impact of advertising on consumer learning and recall
• The role of sensory marketing in consumer learning and behavior
• The influence of online reviews on consumer learning and purchase decisions
• The effect of product placement in movies on consumer learning and recall
• The impact of social media on consumer learning and brand awareness
• The role of brand familiarity in consumer learning and recall
• The influence of product packaging on consumer learning and memory
• The effect of information overload on consumer learning and decision making
• The impact of brand slogans on consumer learning and recall
• The role of perceived value in consumer learning and purchase behavior

Memory and consumer behavior:

• The influence of brand familiarity on consumer memory and recall
• The role of nostalgia in consumer memory and brand preference
• The impact of product design on consumer memory and recall
• The effect of advertising repetition on consumer memory and brand awareness
• The influence of mood on consumer memory and recall of advertising
• The role of social media in consumer memory and brand awareness
• The impact of story-telling in advertising on consumer memory and recall
• The effect of novelty in advertising on consumer memory and recall
• The influence of age on consumer memory and recall of advertising
• The role of emotions in consumer memory and recall of advertising

Culture and consumer behavior:

• The impact of cultural differences on consumer behavior and preferences
• The role of religion in shaping consumer behavior and preferences
• The influence of gender roles on consumer behavior and preferences
• The effect of country-of-origin on consumer behavior and brand perception
• The impact of subcultures on consumer behavior and preferences
• The role of ethnicity in shaping consumer behavior and preferences
• The influence of language on consumer behavior and perception
• The effect of cross-cultural marketing on consumer behavior and perception
• The impact of cultural values on consumer behavior and decision making
• The role of consumer ethnocentrism in shaping consumer behavior and preferences

Emotions and consumer behavior:

• The impact of emotions on consumer decision making and behavior
• The role of mood on consumer decision making and purchase intention
• The influence of emotional branding on consumer behavior and loyalty
• The effect of emotional appeals in advertising on consumer behavior
• The impact of emotions on consumer satisfaction and loyalty
• The role of self-expression in shaping consumer emotional responses to brands
• The influence of nostalgia on consumer emotional responses to brands
• The effect of humor in advertising on consumer emotional responses and behavior
• The impact of product design on consumer emotional responses and behavior
• The role of perceived authenticity in shaping consumer emotional responses to brands

Social Influence and consumer behavior:

• The impact of social norms on consumer behavior and preferences
• The role of social comparison in shaping consumer behavior and preferences
• The influence of reference groups on consumer behavior and brand perception
• The effect of social media on consumer behavior and decision making
• The impact of social identity on consumer behavior and brand loyalty
• The role of social class in shaping consumer behavior and preferences
• The influence of social networks on consumer behavior and brand perception
• The effect of social proof in marketing on consumer behavior and preferences
• The impact of peer pressure on consumer behavior and decision making
• The role of social responsibility in shaping consumer behavior and brand perception

Decision Making and consumer behavior:

• The impact of information overload on consumer decision making
• The role of decision heuristics in shaping consumer behavior and preferences
• The influence of product complexity on consumer decision making and preferences
• The effect of decision context on consumer decision making and behavior
• The impact of decision fatigue on consumer behavior and decision making
• The role of decision-making style in shaping consumer behavior and preferences
• The influence of decision-making strategies on consumer behavior and preferences
• The effect of cognitive dissonance on consumer behavior and decision making
• The impact of choice architecture on consumer decision making and behavior
• The role of decision framing in shaping consumer behavior and preferences

Ethics and consumer behavior:

• The impact of corporate social responsibility on consumer behavior and brand perception
• The role of ethical consumption in shaping consumer behavior and preferences
• The influence of perceived ethicality on consumer behavior and brand loyalty
• The effect of green marketing on consumer behavior and purchase intention
• The impact of fair trade on consumer behavior and brand perception
• The role of animal welfare in shaping consumer behavior and preferences
• The influence of social justice issues on consumer behavior and brand perception
• The effect of cause-related marketing on consumer behavior and brand loyalty
• The impact of transparency in marketing on consumer behavior and trust
• The role of consumer activism in shaping consumer behavior and preferences

These ten categories provide a broad range of consumer behavior research paper topics for students to explore within the field of consumer behavior. By selecting a topic that aligns with their interests and research goals, students can produce a high-quality research paper that contributes to the knowledge base of consumer behavior.

Choosing a Consumer Behavior Topic

Choosing a topic for a research paper in consumer behavior can be a challenging task, especially given the vast array of potential topics. To help students navigate this process, it is important to consider a few key factors when selecting a topic.

• First , it is essential to choose a topic that aligns with your interests and passions. When you are passionate about a topic, it is easier to stay engaged throughout the research process and to produce high-quality work. Additionally, having a personal connection to the topic can inspire new and unique perspectives, leading to original research.
• Second , consider the relevance and significance of the topic. The best research papers are those that make a meaningful contribution to the field of consumer behavior. Look for topics that are timely, relevant, and offer a new perspective on existing theories or practices. A topic that is of current interest to industry professionals, policymakers, or academics can also provide opportunities for real-world impact.
• Third , consider the available resources and access to data. Research papers require a significant amount of data and research, so it is important to choose a topic that allows for access to relevant data and resources. Consider the availability of data sources, academic journals, and industry reports that may be needed to support your research.
• Fourth , consider the scope and focus of the research paper. A topic that is too broad or too narrow can make the research process more challenging. It is essential to identify a specific research question or hypothesis that can be effectively addressed within the scope of the research paper. Additionally, it is important to consider the level of analysis, such as individual or group-level behaviors, and whether the research will be qualitative, quantitative, or mixed methods.
• Fifth , consider seeking guidance from your instructor or a research advisor. They can provide valuable insight and feedback on potential topics and can help guide the research process. Additionally, they may be able to offer suggestions for data sources or research methodologies that can strengthen the research paper.

Ultimately, the key to choosing a successful topic for a consumer behavior research paper is to identify a topic that aligns with your interests, offers relevance and significance, has available data sources and resources, has a focused research question or hypothesis, and seeks guidance from a research advisor or instructor. By carefully considering these factors, students can select a topic that inspires them and leads to a high-quality research paper.

How to Write a Consumer Behavior Research Paper

When it comes to writing a research paper on consumer behavior, there are several key steps to follow to ensure a successful outcome. Here are some tips to help guide you through the writing process:

• Develop a clear and concise research question : The first step in writing a research paper on consumer behavior is to develop a clear and concise research question. This question should be focused and specific, and should guide your research and analysis throughout the writing process.
• Conduct a thorough literature review : Before beginning your research, it is important to conduct a thorough literature review to identify existing theories and research related to your topic. This review will help you to identify any gaps in the existing research that your paper can address.
• Choose appropriate research methods : There are a variety of research methods that can be used in consumer behavior research, including surveys, experiments, and case studies. Choose the appropriate method(s) based on your research question and the data you are trying to collect.
• Collect and analyze data : Once you have identified your research question and chosen your research method, it is time to collect and analyze your data. This may involve conducting surveys or experiments, analyzing existing data sets, or conducting interviews or focus groups.
• Organize and present your findings : After analyzing your data, it is important to organize your findings in a clear and concise manner. This may involve creating charts or graphs to visually represent your data, or using tables to compare and contrast your findings. It is also important to provide a clear and concise summary of your findings in your conclusion.
• Use appropriate formatting and citation styles : When writing a research paper on consumer behavior, it is important to use appropriate formatting and citation styles. Most papers in this field will use either APA or MLA style formatting and citations.
• Revise and edit your paper : Once you have completed your first draft, it is important to revise and edit your paper to ensure clarity, conciseness, and accuracy. This may involve reorganizing sections, cutting out extraneous information, or rephrasing sentences for clarity.

By following these steps, you can produce a high-quality research paper on consumer behavior that contributes to the field and provides valuable insights for academics, policymakers, and industry professionals alike.

iResearchNet Writing Services

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In conclusion, writing a research paper on consumer behavior can be a challenging task, but it is also a rewarding one. By following the steps outlined in this guide, you can produce a high-quality research paper that contributes to the field and provides valuable insights for academics, policymakers, and industry professionals alike.

Remember to choose a clear and concise research question, conduct a thorough literature review, choose appropriate research methods, collect and analyze data, and organize and present your findings in a clear and concise manner. Additionally, using appropriate formatting and citation styles and revising and editing your paper are also important steps in producing a successful research paper on consumer behavior.

If you need additional help with your research paper, iResearchNet offers custom writing services designed to help students produce high-quality, well-researched papers on any topic related to consumer behavior. Our team of expert writers has the knowledge and expertise to help you produce a paper that meets your specific needs and exceeds your expectations.

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Four Different Aspect of Consumer Behavior Model

Impact of the packaging on consumer buying behaviour, the effectiveness of digital marketing and its effect on consumer choice, the use of advertising and marketing across different cultures, differences in consumer behaviour between gen x and millennial's:, the impact of digital and traditional media on the consumer decision process, influences on consumer purchase intentions for organic, how advertisement shapes american society’s perception, amazon: dominating pricing and consumer perception, analysis of the effects of consumer ethnocentrism, uni-president enterprises corporation, cognitive behavioural therapy: the origins and history, consumer and retail trends in china, the influence of culture on consumer in caravan industries, consumer profile: defining the ideal customer, an idea of consumer society in on dumpster diving by lars eighner, a study of consumer behavior in spain, review on the microsoft’s biggest failure: zune, the importance of weather and climate feature in the decision-making process of customers in the tourism and hospitality industry, impact of credit card on consumer behavior, relevant topics.

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Consumer Behavior - Free Essay Examples and Topic Ideas

The marketing concept underlines that gainful marketing starts with the revelation and comprehension of consumer needs and afterward builds up a marketing blend to fulfill these requirements. Hence, a comprehension of consumers and their needs and acquiring conduct is fundamental to fruitful marketing. Shockingly, there is no single hypothesis of consumer conduct that can thoroughly clarify why consumers carry on as they do. Rather, there are various theories, models, and concepts making up the field. Furthermore, most of these ideas have been obtained from an assortment of different controls, for example, sociology, psychology, anthropology, and economics, and must be incorporated to comprehend consumer conduct.(Peter & Donnelly, 2011).

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Social, marketing, and situational impacts

The chapter starts by inspecting social, marketing, and situational impacts on consumer decision making. These give data that can impact consumers’ contemplations and sentiments about purchasing different products and brands. How much this data impacts consumers’ decisions relies upon various psychological impacts. Two of the most significant of these are product knowledge and product involvement. The section finishes up by talking about the consumer decision-production process.(Peter & Donnelly, 2011).

Social classes

Social classes make dependent on such things as wealth, skill, and power. The absolute best pointer of social class is occupation. Nevertheless, excitement presently is in the effect of social class on the individual’s lead.(Peter & Donnelly, 2011). Upper Americans involve 14 percent of the populace and are separated basically by having high earnings. This class remains the gathering where the quality product is most prized and notoriety brands are ordinarily looked for. The middle class contains 34 percent of the populace, and these shoppers need to make the best choice and purchase what is famous. They are worried about style and purchasing what specialists in the media suggest. The working class includes 38 percent of the masses, people who are ‘family individuals’ who depend strongly upon relatives for budgetary and energetic assistance. Lower Americans involve 16 percent of the populace and are as assorted in qualities and utilization objectives as are other social levels. Most get an open hotel, food stamps, and Medicare. The basic solicitations of this social occasion are sustenance, dress, and various staples.(Peter & Donnelly, 2011).

Extensive, Limited, and Routine decision making

The consumer decision making involves certain types such as Extensive, Limited, and Routine decision making. The process of consumer decision making involves certain steps such as need recognition, alternative search, alternative evaluation, purchase decision and post purchase evaluation. (Peter & Donnelly, 2011)

These components can identify with many purchasing choices. For instance, post-purchase dissonance may be relied upon to be available among numerous purchasers of such items as vehicles, significant apparatuses, and homes. In these cases, the choice to purchase is typically a significant one both financially and psychologically, and various good choices are generally accessible.(Peter & Donnelly, 2011).

As noted, scientists have additionally examined post purchase buyer fulfillment. Much of this work has been founded on what is known as the disconfirmation paradigm. Essentially, this methodology sees fulfillment with items and brands because of two different factors. The primary variable is the desires a shopper has about an item before purchase. These desires concern the convictions the customer has about the item’s exhibition.(Peter & Donnelly, 2011).

To conclude, This section introduced a review of consumer behavior. Social, marketing, and situational influences on consumer decision making were discussed first, trailed by a discussion of two significant mental components: item information and item association. Consumer decision making, which can be extensive, limited, or routine, was seen as a progression of stages: need acknowledgment, elective pursuit, elective assessment, purchase decision, and post purchase assessment. Plainly, understanding consumer behavior is essential for creating fruitful marketing techniques.(Peter & Donnelly, 2011)

Peter, J. P., & Donnelly, J. H. (2011). A preface to marketing management (Twelfth ed). McGraw-Hill/Irwin.

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Advanced Consumer Behavior

This essay about the evolution of consumer behavior in the digital age explores how traditional purchasing dynamics have been transformed by technological advancements and changing cultural norms. It discusses the impact of social media and digital analytics, which have shifted the focus from mass marketing to personalized consumer engagement. The text highlights how modern consumers value authenticity, rely heavily on peer reviews and influencer input, and prefer brands that demonstrate transparency and social responsibility. Additionally, it addresses the growing trend towards experiential consumption, where experiences are prized over material goods. This shift challenges companies to rethink how they create and communicate value. The essay underscores the need for marketers to integrate a blend of empathy, technology, and strategic foresight in their approach to remain relevant in this complex consumer landscape.

How it works

Today’s consumer landscape is an intricate web of choices and influences, where traditional buying behaviors are continuously reshaped by technological advancements and shifting cultural norms. As markets evolve, so too does the discipline of consumer behavior, blending elements of psychological insight with cutting-edge technology to decode why consumers make the choices they do.

The modern consumer is an enigma, influenced not only by traditional advertising but also by the vast digital ecosystem. The explosion of data analytics and artificial intelligence has given marketers unprecedented insights into consumer preferences and behaviors.

This has opened up new avenues for personalizing marketing messages and tailoring products to meet the nuanced demands of diverse consumer groups.

Social media has fundamentally altered the dynamics of consumer engagement, creating platforms where peer opinions, influencer endorsements, and viral trends can significantly sway purchasing decisions. This digital word-of-mouth creates communities of like-minded individuals who rely on each other’s experiences and feedback to guide their buying decisions, thereby emphasizing the need for authenticity and transparency in brand communications.

The increasing consumer emphasis on ethical consumption and sustainability also reflects a deeper societal shift. More than ever, consumers are aligning their spending with their values, opting for brands that demonstrate commitment to environmental stewardship and ethical business practices. This trend has forced companies to not only publicize their sustainability efforts but also genuinely integrate these principles into their operations.

The trend toward experiential consumption is another pivotal shift. Consumers are increasingly investing in experiences rather than accumulating goods, seeking fulfillment and personal enrichment through their purchases. This move towards experiential investment challenges businesses to innovate in how they deliver value, transforming traditional offerings into memorable, impactful experiences.

Navigating this complex terrain requires a blend of empathy, technological savvy, and strategic foresight. Marketers must adopt a holistic view of consumer behavior that incorporates these diverse elements, crafting strategies that resonate deeply with contemporary consumer sensibilities.

As we look to the future, the field of consumer behavior continues to be an exciting frontier of discovery and innovation. By embracing a multidimensional approach, businesses can forge stronger, more meaningful connections with their customers, ensuring relevance and loyalty in an ever-changing world.

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Consumer Behavior essays

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Essay Samples on Consumer Behavior

The importance of brand loyalty in business success.

Brand loyalty reflects the connection between a product and a customer's willingness to repeatedly purchase it. A customer is considered loyal when they show commitment to a specific brand, indicating positive sentiments towards the product or company. Loyalty is demonstrated through consistent support for a...

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The Sharing Economy - a New Paradigm in Consumerism

With the rise in technology, people are able to communicate and conduct business through the use of the Internet and social networks. This has led to a sharing economy, where consumers can connect and exchange goods and services. Starting a company in a shared economy...

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Misleading Marketing Schemes in Australia and Their Impact

Marketing is the culprit of generating obesity. Marketing is detrimental to children’s health. Marketing is the culprit. Our country has been slammed with misleading marketing schemes and it is unacceptable. Marketers are using popular methods to wrongly entice young children to buy their products. An...

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The Role That Consumer Behavior Plays on Advertising and Cancel Culture

Society has been conditioned into a consumer culture by advertising outlets since the beginning of time. Advertising in mass media is common to all in America. The mediums for advertising include television, internet, radio, print media and mobile app platforms. Through various marketing methods, advertising...

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The Characteristics of a Consumer Society in the UK by Zygmunt Bauman and Sharon Zukin

From around the 1970’s and 1980’s, the society in the UK shifted their economy from one focused on industrial, mass production and consumption to a more services-based society characterised by what it consumed. Since then, society has become defined not only by what it consumes...

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Consumer Satisfaction and Brand Loyalty

Consumer satisfaction is basic to long pull trade achievement, and one of the most every now and research into subjects in marketing. Since consumer satisfaction has been respected a crucial determinant of long haul business achievement, a great part of the examination on consumer satisfaction...

Consumer Behavior and Satisfaction Toward Different Soap Brands

At this time of globalization, all industrial companies of many countries are competing vigorously at global level. Information technology, global communication and transportation has also become advance in global market. Global rivalry trend is not ending with open market economy. Brands are being sold all...

Usage Of Cultural Capital To Link Socioeconomic Position And Food

Literature Review: Cause Related Marketing In the post-modern era, where the consumers have so many options to choose from, it has become very problematic for organizations to differentiate themselves from the crowd. Thus, to separate itself from this clutter, companies have now started going in...

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The Political and Technological Intervention into the Dunkin' Donuts' Strategy

Dunkin Donuts was founded in 1950, when Bill Rosenberg, a local New Englander opened the first of many Dunkin’ Donuts restaurants in Quincy, Massachusetts. A couple of years done the road in 1955, the first Dunkin’ Donuts franchise was opened and since then the brand...

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Should Travel Agents Offer Discounted Rates on Black Friday

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Empowering Ethical Consumer Activism: A Transformation in Contemporary Society

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The Conceptual Model of Transition-Self

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Benefits of Business Ethics Practices in Corporate Organisations

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A Study on Consumer Behaviour in Footwear Industry

Background of the Study Consumer market includes all the individuals and households who buy or acquire goods and services for personal consumption. According to Kotler and Armstrong (2010), currently, the world consumer market consists of more than 6.6 billion people who annually consume an estimated...

The Research on the Aftermath of Watching Television and Consumer Behavior

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Investigation Of "Nudges" Richard Thaler Argues About In Behavioral Economics And Marketing

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Relocation Of Consumables May Prove To Help Business

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The Factors Of Consumers’ Preferences To Streamable TV Vs Using Cable Companies

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The Use Of Nudge Theory To Influence Consumers

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Analyzing Consumer Behavior: The Role of Perceptions in Marketing

Perceptions play a crucial role in the field of marketing as they shape consumers' attitudes, beliefs, and behaviors towards products, brands, and organizations. Marketers understand that how consumers perceive their offerings can have a significant impact on their success in the marketplace. This essay delves...

Relationship Between Customer Satisfaction And Revisit Intention

When a customer visits a certain enterprise and holds the desire to visit the mentioned enterprise yet again then that intent of the customer is known as revisit intention (Bach and Eichner, 1999). This is the definition of the variable. Behavioral intention is regularly utilized...

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The Effects Of Beliefs And Attitudes On Consumers’ Decisions

The effects of beliefs and attitudes should not be underestimated as they can severely affect consumers’ decisions. As stated in the article, as a result of superstition, Chinese consumers gain a belief that the number ‘4’ is inauspicious. Hence they perceive that products associated with...

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The Effect Of Consumption Experience On Individuals And Society

Consumer behaviour is vital in aspect of marketing. It is the study of how and why people make decisions about what they need to purchase, use and dispose regarding goods, services or a company. This essay will examine the effect of consumption experience on individuals...

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Best topics on Consumer Behavior

1. The Importance of Brand Loyalty in Business Success

2. The Sharing Economy – a New Paradigm in Consumerism

3. Misleading Marketing Schemes in Australia and Their Impact

4. The Role That Consumer Behavior Plays on Advertising and Cancel Culture

5. The Characteristics of a Consumer Society in the UK by Zygmunt Bauman and Sharon Zukin

6. Consumer Satisfaction and Brand Loyalty

7. Consumer Behavior and Satisfaction Toward Different Soap Brands

8. Usage Of Cultural Capital To Link Socioeconomic Position And Food

9. The Political and Technological Intervention into the Dunkin’ Donuts’ Strategy

10. Contouring and Highlighting Our Knowledge of Makeup

11. Consumer Behavior of Gen X and Millenial Costumers Regarding Perfume Industry

12. Should Travel Agents Offer Discounted Rates on Black Friday

13. Empowering Ethical Consumer Activism: A Transformation in Contemporary Society

14. The Conceptual Model of Transition-Self

15. Benefits of Business Ethics Practices in Corporate Organisations

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• Democratic Leadership
• Family Business
• Time Management
• Workplace Violence

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• Consumer Behavior

Essays on Consumer Behavior

This research was undertaken to establish the factors which determine the consumer behaviour in the retail market of the United Kingdom: a study of Sainsbury's. The objectives of the study were to determine the major issues faced by the UK retail market, establish the impact of business issues on overall...

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This chapter presents research findings of the study carried out to investigate the impact of the Narcissism, Machiavellianism and Psychopathy personality on snob consumption behavior and the influence of the psychological antecedents producing snob effect and its association with the consumers’ dark personality. Descriptive statistics will be used to discuss...

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The paper is a detailed review of Chinese consumer behavior and culture and how that it influences their purchasing path among outbound leisure travelers. Collectivist tourists were more inclined to initiate purchases based on social considerations such as self-image, and reputation. On the other hand, the individualists were more self-centered,...

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The objective of the present study was to examine the impacts of social media on consumer behavior within the context of Tanzania. The researcher focused on two specific industries, namely: Consumer Electronics, and Personal Effects. These two industries were selected based on the idea that consume electronic and personal effect...

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The dissertation researched has been presented and submitted as one of the units with my approval as the instructor (supervisor) Supervisor’s Name …………………… Signature …………………… Date …………………… School (…………….) Department (………..) Program (………….) Table of Contents Chapter one 1 Introduction 1 Effects of advertisements 2 Misrepresentation of a product in the ads 2 False image 2 Not disclosing the side effects 2 Background 3 Rationale 5 Statement of the...

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Over the past several decades, electronic products have a rapid development; People s daily life has become more convenient and efficient, by the help of these modern tools. However, electronic waste (e-waste), is the by-product of electronic products success, is troubling the environment as well. E-waste is a...

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Online social networks have become an integral part of the lives of people in the modern age. They are virtual spaces hosted through the Internet where people develop public profiles in a bid to share information and understandings, post material about themselves, and keep in touch with other individuals around...

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How effective is Alibaba s Single Day s targeting of 16-25s (Generation Z) using digital promotion, global collaboration, fashion innovation and celebrity endorsement, and which factor driven them the most? Declaration No portion of the work referred to in this dissertation has been submitted in support of an application for another degree...

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Even though consumer behaviour is among the most researched areas in the context of tourism, there are few extensive analysis of the areas of knowledge in this category exist. Thus, this research examines how decision-making models of Chinese consumers’ effect they way they purchase destination holidays. By use of essay...

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Different people demonstrate unique approaches when it comes to their purchasing behavior and decision-making while shopping for clothes for a various reason. In line to this, the product, price, promotion, and place play a major role in their decision-making process. This paper tends to discuss the consumer behavior, its aspect,...

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Alvi, F. S., Hafeez, M. Munawar, R. 2014. Consumer Culture: An Analysis in a Socio - Cultural and Political Frame. A Research Journal of South Asian Studies, v. 29 (1), pp. 103-114. The authors conducted a study on consumerism in Pakistan and the prospect of developing a network of mass...

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2.1 Introduction In this chapter, the current study addresses some conventional understanding of the significance of consumer based-brand equity on the perception of consumers on a brand within critical theoretical paradigms with the aim of contextualizing the research findings. The task herein has been achieved by covering the available literature. Thus,...

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Essays on Consumer Behavior

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Essay on Consumer Behaviour

Read this essay to learn about Consumer Behaviour. After reading this essay you will learn about:- 1. Definition of Consumer Behaviour 2. Factors Influencing Consumer Behaviour 3. Study of Consumer as an Individual 4. Consumer Behaviour in their Cultural and Social Settings 5. Influence of Consumer Behaviour on Decision Making Process.

Essay Contents:

• Essay on the Influence of Consumer Behaviour on Decision Making Process

Essay # 1. Definition of Consumer Behaviour:

Consumer behaviour is defined as the behaviour that consumers display in searching for purchasing, using, evaluating and disposing of prod­ucts, services and ideas that they expect will satisfy their needs.

The study of consumer behaviour is concerned not only with what consumers buy, but also with why they buy it, when, where and how they buy it and how often they buy it. Consumer behaviour is an integral part of strategic market planning.

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The study of consumer behaviour is the study of how individuals make decisions to spend their available resources (time, effort, money) on consumption-related items. Methodology used to study consumer behaviour is known as consumer research.

Consumer research takes place at every phase of the consumption process; before the purchase, during the purchase, and after the purchase. The field of consumer research developed as an extension of the field of marketing research to enable marketers to predict how consumers would react in the market place and to understand the reasons they made the purchase decisions they did.

Since the market place is composed of different people, with different backgrounds, differ­ent interests, different needs and wants, it is necessary to segment the markets. Market segmentation is the process of dividing a market into distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a specially designed marketing mix.

Following major categories of consumer characteristics provide the most popular basis for market segmentation:

1. Geographic factors

2. Demographic factors

3. Psychological characteristics

4. Sociocultural variables

5. Use-related characteristics

6. Use-situation factors

7. Benefits sought and

8. Hybrid segmentation forms.

Essay # 2. Factors Influencing Consumer Behaviour :

Consumer behaviour is influenced by following factors:

1. Cultural Factors:

Culture, subculture and social class.

2. Social Factors:

Reference groups, family, and roles and statuses.

3. Marketing Inputs:

Information from a variety of sources. Product, price, place and sales promotion information.

4. Situational Factors:

Users, usage occasions, availability of finance, availability of products.

5. Personal Factors:

Age, stage in the life cycle, occupation, economic circumstances, life-style, personality and self-concept.

6. Psychological Factors:

Motivation, perception, learning, beliefs, and attitudes.

Research into all these factors can provide clues as to how to reach and serve consumers more effectively.

Essay # 3. Study of Consumer as an Individual :

Consumer needs :.

Psychologists and consumer behaviourists agree that most people tend to experience the same kinds of needs and motives. Human-needs—consumer needs—are the basis of all modern marketing. Marketers do not create needs, they simply make consumers more keenly aware of unfelt needs.

Successful marketers define their mar­kets in terms of the needs they presume to satisfy, rather than in terms of the products they sell. This is a market- oriented approach to marketing.

The specific courses of action that consumers pur­sue and their special goals are selected on the basis of their thinking processes (i.e. cognition) and previous learning. Therefore, marketers attempt to influence the consumer’s cognitive processes.

The needs are physiological (food, shelter, clothing etc.) and acquired needs (psychological needs like esteem, fear, love and acceptance). For any given need, there are many different and appropriate goals. The specific goal selected depends on the individual’s experiences, physical capacity, prevailing cultural norms and values, and the goals accessibility in the physical and social environment.

Needs and goals are interdependent and change in response to the individual’s physical condition, environment, interaction with other people, and experiences. As needs become satisfied, new higher-order needs emerge that must be fulfilled. Failure to achieve a goal often results in feelings of frustration.

Personality and Consumer Behaviour :

Personality can be defined as the psychological characteristics that both determine and reflect how a person responds to his or her environment. Trait personality theory states that individual possess innate psychological traits, e.g., innovativeness, novelty seeking, need for cognition, materialism, to a greater or lesser degree and that these traits can be measured by specially designed scales.

Each individual has a perceived self-image as a certain kind of person with certain traits, habits, possessions, relationships and ways of behaving. Consumers frequently attempt to pre­serve, enhance, alter, or extend their self-images by purchasing products or services and shop­ping at stores believed to be consistent with the relevant self-image and by avoiding products and stores that are not.

Consumer Perception :

Perception is a process by which an individual selects, organises, and interprets stimuli into a meaningful and coherent picture of the world. Examples of stimuli include products, pack­ages, brand names, advertisements, and commercials. Sensory receptors are the human organs that receive sensory inputs.

The study of perception is largely the study of what we subcon­sciously add to or subtract from raw sensory inputs to produce our own private picture of the world. People organise these stimuli on the basis of certain psychological principles.

The inter­pretation of stimuli is also uniquely individual, because it is based on what individuals expect to see in light of their previous experience, on their motives, and interest at the time of percep­tion.

Consumers have a number of enduring perceptions, or images that are particularly rel­evant to the study of consumer behaviour. Influences that tend to distort objective interpreta­tion include physical appearances, stereotypes, halo effects, irrelevant cues, first impressions, and tendency to jump to conclusions.

Just as individuals have perceived images of themselves, they also have perceived images of products and services, of prices, product quality, retail stores, manufacturers, and of brands. Products and services that are perceived favourably have a much better chance of being pur­chased than products or services with unfavourable or neutral images.

Consumers often judge the quality of a product or service on the basis of informational cues ; some are influenced by colour, size, flavour etc. while others by price, store image, brand image, service environment etc.

In the absence of direct experience or other information, con­sumers often rely on price as an indicator of quality. Manufacturers who enjoy a favourable image generally find that their new products are accepted more readily than those of manufac­turers with less favourable images.

Consumers generally perceive functional or financial risk in making product selection be­cause of uncertainty as to the consequences of their decisions.

In order to reduce this perceived risk consumers strategy by increased information search, brand loyalty, buying a well-known brand, buying from a reputable retailer, buying the most expensive brand, and seeking reassur­ance in the form of money-back guarantees, warranties and pre-purchase trial.

This concept has important implications for marketers, who can facilitate the acceptance of new products by incorporating risk reduction strategies in their new product promotional campaigns.

Learning is a process by which individuals acquire purchase and consumption knowledge and experience that they apply to future related behaviour. Cognitive learning theory is con­cerned with how information is processed by the human mind, how it is stored, retained and retrieved. The processes of memory include rehearsal, encoding, storage, and retrieval.

Consumer Attitudes :

Attitude research is undertaken to determine:

(a) Whether consumers will accept a proposed new-product idea,

(b) To learn how target customers are likely to react to a proposed change in the firm’s packaging.

Awareness of consumer attitudes is such a central concern of both product and service marketers that it is difficult to imagine any consumer research project that does not include the measurement of some aspect of consumer attitudes.

Attitudes are an expression of inner feelings that reflect whether a person is favourably or unfavourably predisposed to some ‘object’ e.g., a brand, a service, a product, product category, product use, price.

The formation of consumer attitudes is strongly influenced by:

(a) Personal experience

(b) Influence of family and friends

(c) Direct marketing

(d) Exposure to mass media

(e) Individual’s personality

Similar to attitude formation, attitude change is also influenced by:

(i) Learning,

(ii) Personal experience,

(iii) Other sources of information, and

(iv) Personality.

Attitude change strategies that can be used are:

1. Changing the consumer’s basic motivational function,

2. Associating the product with an admired group or event,

3. Resolving two conflicting attitudes,

4. Altering components of the multi-attribute model, and

5. Changing consumer beliefs about competitors brands.

Communication and Persuasion :

In order to create persuasive communications, the marketer must first establish the objec­tives of the communication, then select the appropriate audience for the message and the ap­propriate media through which to reach them, and then design the message in a manner that is appropriate to the medium and to the audience. A prompt feedback is also essential, to enable the marketer to make modifications to the media and message, if required.

Communications are of two types:

(a) Interpersonal Communication:

These occurs on a personal level between two or more people and may be verbal or nonverbal, in person, by telephone or by mail.

(b) Impersonal or Mass Communication:

In these, there is no direct contact between source and receiver through impersonal media such as television, radio, newspapers, or magazines.

Media selection depends upon the product, the audience and the advertising objectives of the campaign.

Essay # 4. Consumer Behaviour in their Cultural and Social Settings:

Group dynamics :.

Almost all individuals regularly interact with other people who directly or indirectly influ­ence their purchase decisions. Hence, the study of groups and their impact on the individual is of great importance to marketers concerned with influencing consumer behaviour.

Following are the basic types of consumer-relevant groups which influence the consumption behaviour in individuals:

2. Friendship groups,

3. Formal social groups,

4. Shopping groups,

5. Consumer action groups and

6. Work groups.

Factors that affect the reference group influence are:

(a) Information and experience

(b) Credibility, attractiveness and power of reference group.

(c) Conspicuousness of the product.

Following major types of reference group appeals in common marketing usage are:

1. Celebrity appeals e.g. movie stars, TV personalities, popular entertainers, sport stars etc.

2. Expert appeals. A person who, because of his occupation, special experience is in a unique position to help the prospective consumer evaluate the product or service.

3. Common man appeals. In this, testimonials of satisfied customers are used to demonstrate to prospective customers that someone just like them uses and is satisfied with product or service.

4. Executive appeals. In this, firms use their top executives as spokespersons in con­sumer ads. because their appearance seems to imply that someone at the top is watching over the consumer’s interest.

5. Trade or spokes-character appeals.

These present an idealised image and dispense information that can be very important for the product or service.

These reference group appeals are effective promotional strategies because they increase brand awareness and reduce perceived risk among prospective customers.

Family Decision-Making :

Many marketers recognise the family as the basic decision-making unit, they most frequently examine the attitudes and behaviour of only one member who is a major decision­-maker. Sometimes, they also examine the attitudes and behaviour of the primary user of the product or service.

The extent and nature of husband-wife influence in family decisions depends on the specific product or service, and the specific product feature under consideration.

Social Class and Consumer Behaviour :

Social class profiles provide a broad picture of the values, attitudes, and behaviour that distinguish the members of various social classes. Social class may be defined by the amount of status that members of a specific class possess in relation to members of other classes.

In recent years, some marketers has turned to geo-demographic clustering. Geo-demographic clustering is a technique that combines geographic and socioeconomic factors to locate concentrations of consumers with particular characteristics.

Consumer researchers have been able to relate social-class standing to consumer attitudes concerning specific products and social class influences on the actual consumption of products.

Influence of Culture :

In the context of consumer behaviour, culture is defined as the sum total of learned beliefs, values and customs that serve to regulate the consumer behaviour of members of a particular society. Beliefs and values are guides for consumer behaviour.

Subculture:

The members of a specific subculture possess beliefs, values and customs that set them apart from other members of the same society. Subculture defines a distinct cultural group that exists as an identifiable segment within a larger and more complex society. India has a large number of subcultures depending upon geographical location, castes, tribes, religion, age, sex, etc.

All consumers are simultaneously members of more than one subcultural segment. There­fore, marketers should strive to understand how multiple subcultural memberships interact to influence target consumers’ relevant consumption behaviour.

Cross-Cultural Consumer Analysis :

Cross-cultural consumer analysis is the effort to determine to what extent the consumers of two or more nations are similar or different. If international marketers are to satisfy the needs of consumers effectively, they must understand the relevant similarities and differences that exist between the peoples of the countries they decide to target.

Consumers have specific atti­tudes or even preference for products made in particular countries. These “country-of-origin” effects influence how consumers rate quality, and sometimes, which brands they will ultimately select.

Main problems involved in cross-cultural analysis are: differences in language, consump­tion patterns, needs, product usage, economic and social conditions, marketing conditions etc.

Cross-cultural analysis should be based on psychological, social, and cultural characteristics concerning the consumption habits of foreign consumers. Such analysis would identify increased marketing opportunities that would benefit both international marketers and their targeted consumers.

Essay # 5. Influence of Consumer Behaviour on Decision-Making Process:

Opinion leadership :.

Friends, neighbours, acquaintances, co-workers and others have influence on the individual’s consumption behaviour. Nature and dynamics of this influence called the opinion leadership process, and the personality and motivations of those who influence called the opinion leaders, and those who are influenced called the opinion receivers are need to be examined.

Opinion leadership is the process by which one person (the opinion leader) informally influ­ences the actions or attitudes of others, who may be the opinion seekers or merely opinion recipients.

Marketing strategists concentrate their efforts more on the opinion leaders segment as compared to opinion receivers segment. Therefore, marketers can create opinion leaders for their products by taking socially involved or influential people and deliberately increase their enthusiasm for a product category.

Variables in Consumer Decision-Making :

The decision model has three sets of variables:

1. Input variables,

2. Process variables and

3. Output variables.

Input variables that affect the decision-making process include commercial marketing ef­forts, as well as non-commercial influences from the consumer’s sociocultural environment.

Decision process variables are influenced by the consumer’s psychological field, including the evoked set {i.e. the brands in making a purchase choice). The psychological field influences the consumer’s recognition of a need, pre-purchase search for information and evaluation of alternatives.

The output phase of the decision model includes the actual purchase (either trial or repeat purchase) and post purchase evaluation. Both pre-purchase and post purchase evaluation feedback in the form of experience into the consumer’s psychological field, and serve to influence future decision processing.

Consumer behaviour is not just making a purchase decision or the act of purchasing, it also includes the full range of experiences associated with using or consuming products and services. It also includes the sense of pleasure and satisfaction derived from possessing or collecting “things”.

The outputs of consumption are:

(i) Changes in feelings, moods or attitudes;

(ii) Reinforcement of lifestyles, an enhanced sense of self, satisfaction of consumer related need;

(iii) Belonging to groups;

(iv) Expressing and entertaining oneself.

Related Articles:

• Consumer Behaviour: Meaning, Process, Types, Buying Motives and Factors | Marketing
• Consumer Behaviour Research: Difficulties and Techniques | Marketing
• Consumer Behaviour Models
• Importance and Significance of Studying Consumer Behaviour

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The Impact of Pricing Analysis on Consumer Behavior and Business Profitability

1. introduction.

The study of econometrics is motivated by the belief that pricing analysis can contribute important knowledge both to the understanding of consumer behavior and, through that understanding, to an improvement in business profitability. Most writers in the field of econometrics or empirical microeconomics have begun by examining the problem of how to determine the price elasticity of demand for a product among a set of demand determinants. As the implications of increased understanding of consumer behavior obtained through realistic pricing analysis become more fully appreciated, not only the tools but also the form of most empirical consumer demand analysis can be expected to change. Furthermore, in recent years it has become clear that pricing analysis raises as many methodological and analytic issues as demand analysis and that the two actually belong together in a single discipline of value and demand analysis. An introduction to the family of problems which interest consumer demand researchers is to be found in any good textbook, say, or, of microeconomics. The basic data requirements and methodology of the demand science have also been well detailed in many publications. Almost every introductory reader has committed all or part of the research resources to move beyond the exploratory hypothesis-forming stage which has characterized most pricing literature. For instance, there has been no effort to systematically review the existing pricing studies and to map out a hierarchical chart of the possible determinants of prices. This small survey of the existing pricing studies should whet the interest of upcoming researchers as to the many unanswered pricing questions that still lie dormant in the marketplace. With the exception of the period immediately following the publication of the original Phillips study, many of the consumer demand researchers inquiries who have varied charges or costs of funds in an almost scientific manner have foolishly failed to consider the marketing literature.

1.1. Background and Rationale

Pricing impacts a series of social, economic, and welfare-related behaviors across our lives. It is the mechanism through which all consumers decide how to spend their money, from the groceries and clothes that they buy, to the health services that they use, to the demands of the utilities that they could not live without before. For businesses, regulated prices dictate whether or not it is profitable for them to serve certain markets. Decisions both by firms to reduce the prices that they charge and by investors to bid up the share prices of such firms are thus influencing indicators of the country's economy well-being, particularly unemployment, and along with interest rates, the most significant factor determining the balance of payments' accounts, and thus exchange rates around the globe. Various factors are affecting the level of prices in a society, including the prevailing legal, taxation, trading, and labor relations environment within the jurisdiction. Regulators with responsibilities in these areas seek to influence price behavior and economics, directly in most domestic economies, and vice versa. They all seek to understand how prices are set through the analysis of consumer behaviors. Clothing, particularly designer fashion retail, is in the vanguard of the development of value or demand-based pricing, using sales and stock management data generated by new ordering and epos technologies, allied to relationships modeled by customer relationship management concepts between customers and retailers. The prices of goods and services are dependent on the costs of offering these goods and services, demand for goods and services, and strategies adopted by businesses at different stages of the value chain. All these components are changing over time and the now well-established basic shape of the goods and services economies, driven by changes in communication and technology, labor, economic policy, international relations and law, consumer roles, and business strategies, is now in motion. The purposes of this book are threefold. First, several small-scale studies between the last century childhood boutiques and the consequences of their pricing strategies are being reported.

2. Theoretical Framework

Practitioners often use pricing analysis to assess the impact of price on consumer behavior and business profitability. In this paper, I apply and extend relevant theoretical models of consumer behavior to provide guidance on how practitioners can improve the focus and quality of pricing analysis efforts. The theoretical models also provide insights about when pricing policy changes are most likely to be successful in attracting new customers and retaining current customers while improving profitability. Several excellent excerpted book chapters, papers, and applications guides, among others, provide a comprehensive treatment of pricing analysis and necessary econometric and other related statistical tools for making valid conclusions. Rather than duplicate these useful resources, our focus is intentionally more narrow. We provide a selective review of relevant theoretical models of consumer behavior that should inform practitioner pricing analysis and describe some applications that we have found useful in these and other related models of consumer choice.

2.1. Key Concepts in Pricing Analysis

Pricing is the first marketing mix decision; this critical decision must take into account the value consumers place on the product or service as well as set a viable price and take into account market competition. Organizations can use pricing as a key strategic tool in order to stimulate growth, enhance customer loyalty, and acquire and retain customers. Pricing is also one of the factors of the marketing mix that still seems to be at the basis of some consumer behaviors. When a consumer is faced with a purchase decision, one of the items that must be considered is the price of the product or service, and this is not always straightforward. First, it is important to understand that the price is not directly related to the cost of production. Price is a mechanism of free competition; that is, it is established with limited interference in the marketplace. Secondly, it is important to remember that the company has no control over the consumer's willingness to buy the product. If the consumer prefers the competitor's product, the company may need to reconsider the value offered to the market, the advantages of its products, and again, evaluate the price consumption. When considering price, it is important to understand that it has different connotations for different people. This will be possible to understand the diverse aspects of the price concept. Price is money. Money is important. To establish the correct price level for the products or services offered by the company and of interest to the market segmentation to which the company wishes to belong, it is necessary to carry out a pricing analysis. This consists of analyzing all aspects related to price formation, not just the costs involved in the production or delivery of the product or service to the consumer. Prices and their variations convey a large number of messages to consumers due to their psychological meaning, but also and above all to those that bear cultural and emotional values. The function of the price system also responds to the question to which principles, closely related to the objectives and strategies of the company, do the mechanisms of the market price. The price is the only element of the marketing mix that generates revenue – the other elements generate costs. The research presented in this thesis aims to analyze the impact of pricing analysis on consumer behavior and business profitability.

3. Methodology

The adoption of a policy of periodic goods-market-price reduction by a trader to coincide with a drop in touchdown is an effective means for increasing existing market control. It can attack an underlying weakness in the touchdown effect produced by rivals who continue high market prices on the reduction-capable price range. Its success as a competition prodding strategy lies in the consumer behavior modification it provokes. The associated examination, discovery, and feedback applications provide the decision input and basic analysis to permit good incorporation of merchandise-price reduction responsibility within the trader's structure. Three forms of feasible implementation are suggested: 1) an internal redistribution of consumer savings under normal control by trader ownership of both goods- and touchdown-producing corporations; 2) a consumer view-of-life enhancement in times of little financial personal consequence to the trader; and 3) the software product form, Market Control, for external retailer use. A modified responder-statistical-experimental technique based on the behavioral psychology phenomenon of failure to perceive the ownership of a negative windfall, the touchdown effect of ignorance/blindness, was employed. In conjunction with other qualitative methodologies, it was used to explore the impact on consumer shopping behavior of a consumer-touchdown-goods-price-coincident feedback campaign. It lacks to affect the relationship between goods price and consumer touchdown response. A theory of enhanced warmth in this price process towards the reduction condition is constructed based on a simple warm glow theory resulting from civic society membership. The observed simple relationship between price and volume for products with a generally downward trend in price is upheld using four other products.

3.1. Research Design and Data Collection

The impact of pricing analysis on consumer behavior and business profitability 3.1 Research design and data collection The present study will serve to test the hypothesis outlined in the earlier sections of the paper. The research design employed in the article answers three primary questions: (i) Do different descriptions, and therefore price perceptions for identical products exist? (ii) Can these price perceptions be modeled? (iii) And most importantly, can the price perceptions and the model presented in this paper impact consumer behavior and business profitability? The data utilized in this study were derived from a CPV (Choice Pair Value) exercise where respondents are presented with pairs of products at different price points and asked a series of questions regarding their willingness to purchase and justify the higher-rated products. One of the foremost advantages of this non-hypothetical mechanism over contingent valuation is that it provides a much more informative measure of true consumer willingness to pay for all attributes through revealed preferences by showing respondents real trade-offs between price and another attribute. This method has been proven robust to incentive problems, particularly in the form of payment concerns, which are known to distort WTP responses.

4. Empirical Findings

Empirical Findings: The Facts. We report in this section some of the more salient findings which we include in the empirical microstudy. The first of them shows the effects of price changes on the number of consumer buyers, concluding that small providers lose. The same data can be used to find out that richer, more price-sensitive consumers are happier. It seems that a summarized model of the utility derived from buying a product specifies two terms: it has to compensate for the purchase price and at least keep constant the shadow price of the quantity of product used. Since lower prices come at the expense of higher quantities, price reductions cause hyper happiness without loss of contentment at counterside based on resulting wealth differentials. A positive correlation exists between the percentage price change and the percentage number of batches which have to exceed a 10 to 150 price difference threshold to have findings of statistical significance. Then we show that a provider's price drop does not lead to happiness in the consumer's original sense of contentment and carefulness at counterside. A morally better relationship exists between utility and the original price received before discount. Hyper happiness for those consumers of a provider is true to customers' type and is proportioned to wealth differentials. Non-purchase for lack of income is more astute than unfaithfulness by anger without active exit from a small provider because hyper happiness masquerades as brand preference, series surge, and loyalty at no extra cost.

4.1. Consumer Behavior Insights

From a pricing analysis, the company can gain insights about how consumers react to price changes. When products are perceived as good value and their features compared favorably with price, category spending and brand loyalty can be retained even through price increases. However, when products are perceived by price-sensitive customers as less relevant, then pricing strategies should be replaced with branding, repositioning, and promotion strategies designed to appeal to non-price-related consumer buy criteria. 4.1.1. Assumptions Conventional assessment of consumers' interactions in a transaction relating to needs, perceptions, preferences, purchase, and patterns are influenced by socioeconomic status, social class, lifestyle, innate interpersonal factors, peer, family, and situational/external elements all play a major role in consumer behavior. Without valid segmentation analysis, this information has little monetary value to the company or brand. Furthermore, changing consumer market behavior has raised questions associated with multiple trade dimensions and the rapid acceptance of ready-meal solutions due to an increasing number of working consumers, families with busy lifestyles, and less time for domestic activities. These important assumptions were verified and supported by company representatives.

5. Practical Implications and Recommendations

Business profitability is a result of consumers deciding to make a purchase from the business. The business earns income by providing an offering that has a value to the consumer that exceeds the price offered (which includes the price of the product or service plus any taxes or fees). However, depending on the prices of competing offerings, a consumer could decide to buy one offering instead of another (from a different firm) offered in the market, to buy both offerings (he or she may need both) and reduce the purchase quantity based on the financial constraints, to wait for a price rollback (if he or she believes that the price will be reduced in the future), or to wait for the next generation of the same offering if the offering is not priced as low as he or she expects the price to be. In addition to the level of benefits received relative to other potential offering providers, an offering can also influence the consumer's purchase decision based on the expected benefits offered, surprise benefits offered, the consumer's psychological needs and lifestyle, the consumer's personal values, and the reliability of the funds associated with the transfer of ownership to the firm. The theoretical research in marketing studies pricing methodology and provides models (supported by experimental results) as long as the relevant customer utility functions are known. Most of the firm-based models are compared using Monte Carlo methods or computing results from approximate expressions. Although insights are gained from the more theoretical research, customer- and firm-based information rarely coincide. Often incorrect or incomplete utility models are employed and model parameters are estimated using misleading consumer information and/or firm data. In conclusion, understanding price sensitivity is vital to business profitability. However, identification of individual consumer behaviors in the area of price sensitivity is extremely complex because it involves both the understanding of best practices for consumer research and the knowledge of best practices in pricing. Firms often make assumptions about consumer price sensitivity based on incomplete and potentially false information. Providing offerings at the right price – at the right time – affects the ability of the firm to sustain profitability. The utilization of high-quality trade studies (including appropriate pricing research) is needed to provide a balanced process of making informed decisions, which results in capturing the maximum share of the customer's purchasing dollars and market evaluation. This will ultimately lead to the financial growth of the firm and improved quality of life for the people involved with the firm.

5.1. Strategies for Pricing Optimization

Building a pricing analytics model requires multidisciplinary knowledge about statistics and computer science. This model must be able to simulate consumer behavior and optimize prices, keeping the company's strategic objectives in view. The latter means that the model must be able to modify price optimization strategies on the fly. The amount of research in pricing analytics is vast and steadily increasing, but very little is known about how to tailor pricing strategies to specific product types. This study addresses this research gap with an empirical study on the impact of the degree of differentiation versus bounded rationality. We will contemplate some basic strategies for historical revenue data mining. First, we will turn to identifying associations between sales on different items to identify cross-price elasticities. We will then explore finding discriminatory target customers for personalized pricing. Following will be a discussion on temporal pricing, i.e. on how to influence shopping speed – or how to be more successful in holding the customer for more time. Then we will discuss strategies like the popular Continuous Discounting, Creaming, or Variable Cadence Pricing. If item yield, i.e. the relative number of customers buying an item, is a variable that can be influenced by strategic decisions, we optimize this using different parameterized pricing strategies.

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Meet the 'new consumer': How shopper behavior is changing in a post-inflation world

by Omar H. Fares and Joseph Aversa, The Conversation

After a long anticipated wait, the Bank of Canada has finally decided to cut interest rates by 25 basis points . The decision marks a departure from the series of interest rate hikes that were previously implemented to curb inflation .

The recent decrease appears to be signaling that inflation is finally starting to stabilize in Canada.

Over the past few years, Canadians have felt the strain of inflation . Many individuals turned to deal-chasing and savings as a way to build financial safeguards, giving rise to what we, as retail researchers, call the "new consumer."

This "new consumer" phenomenon appears to be more than just a temporary response to economic hardships. It has since evolved into a more permanent behavioral shift, reflecting a broader transformation in consumer habits and preferences.

As inflation stabilizes and the economy adjusts to a new normal, businesses must adapt to meet the changing needs and preferences of this demographic.

Who is the 'new consumer'?

The new consumer is marked by value consciousness , digital savviness and a preference for experiences over material goods .

Despite the recent stabilization of consumer prices , the new consumer has retained habits formed during economic uncertainty , continuously seeking deals and discounts.

According to the latest Future Consumer Index report by consulting firm Ernst & Young Global Limited, U.S. consumers are increasingly prioritizing savings over brand loyalty .

The survey revealed that nearly half of participants would download a brand's app to access loyalty promotions or exclusive deals, while 70% were inclined to join loyalty programs for free shipping benefits.

Additionally, 45% of respondents have used discount codes or vouchers during online shopping in the past six months. This trend highlights the significant shift towards cost-conscious consumer behavior.

Consumers are also actively using digital platforms to compare prices and read reviews , making more informed purchasing decisions than ever before. This digital savviness allows them to navigate the online marketplace efficiently, ensuring they get the best value for their money.

Physical store experience is still key

Despite the emphasis on looking for deals and reviews online, the new consumer still values in-store experiences. According to the Ernst & Young survey, 59% of consumers visit stores to see, touch and try items before buying, and 57% prefer in-store shopping to avoid shipping hassles.

Additionally, human interaction is increasingly important during the post-purchase journey. Fifty-six percent of U.S. consumers consider it crucial for product returns and refunds, and 55% value it for discussing product questions or concerns.

There's also a notable shift towards experiential spending . Consumers are now more inclined to invest in travel, dining and unique activities over accumulating material possessions. This trend reflects a desire for meaningful and memorable experiences that offer greater satisfaction than physical goods.

Understanding these characteristics is essential in the new age of retailing. The new consumer's focus on value, informed by digital tools and a shift towards experiential spending, defines their behavior in a post-inflation world.

This evolving consumer profile presents both challenges and opportunities for brands and retailers, shaping the future of the retail landscape.

How retailers can cope

In an era where digital commerce continues to grow, physical retail stores are being forced to reinvent themselves, moving away from transaction points to vibrant hubs of brand experience. For instance, fueled by the COVID-19 pandemic, retail e-commerce sales increased 67.9% in Canada from February 2020 to July 2022.

This shift underscores the evolving role of physical stores, which are becoming places where consumers can learn, experience and play. As retailers adapt to changing consumer expectations, the notion that a store must be more than a place to transact is becoming a fundamental aspect of retail strategy.

A prime example of this trend is the Nike store in Manhattan , which epitomizes the concept of the store as a medium rather than just a marketplace. Far from the traditional retail setup, this location serves as a "playground" centered around experience.

The store includes a basketball half-court with adjustable hoops and digital screens, an enclosed soccer trial area, a treadmill facing a jumbotron for simulated outdoor runs, a customization shoes bar, touchscreens throughout and dedicated coaches to assist customers testing new sneakers.

The transformation of stores into experience-rich environments reflects a broader trend in retail where the value of a physical location is measured not just by traditional sales per square foot, but by the ability to engage consumers in a more meaningful ways. Retailers who invest in making their stores true extensions of their brand are primed to set themselves apart in an increasingly competitive marketplace.

Loyalty first

To thrive in this new retail landscape, leveraging loyalty programs is essential for retailers . These programs can help bridge the gap between digital and physical retail experiences by offering personalized rewards and exclusive deals that drive both online and in-store traffic.

Retailers should focus on creating loyalty programs that not only reward purchases but also enhance the overall customer experience.

For instance, integrating mobile apps that provide real-time notifications on deals and events, offering exclusive in-store experiences for members and using data analytics to tailor rewards to individual consumer preferences can significantly enhance engagement and retention.

In essence, the future of retail lies in these dynamic, personalized and interactive spaces where shopping is only part of the appeal.

Provided by The Conversation

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The Economic Theory That Explains Why Americans Are So Mad

Annie lowrey talks about how the affordability crisis is shaping how americans perceive the state of the economy..

[MUSIC PLAYING]

From New York Times Opinion, this is “The Ezra Klein Show.”

I’ve been thinking about this episode for a bit, so I’m going to spend a couple of minutes here, setting it up.

Back in September, the economist put out this interesting model that pulled in a bunch of different bits of economic data, so things like the unemployment rate, inflation, gas prices, the S&P 500. And they used all that to predict how people would feel about the economy. And they showed that from 1980 to 2019. All these bits of data, they do predict how people feel about the economy.

And then the pandemic hits and the model completely falls apart.

By late 2023, the model is looking at low unemployment, it’s looking at falling inflation, it’s looking at a great stock market, and it predicts consumer sentiment. It’s going to be 98 out of 100, 98 out of 100. That is Joe Biden gets his face on a coin territory. Here, in reality, the actual consumer sentiment was 69. That is Joe Biden might lose re-election territory.

There’s been this debate for a year or two now about whether the economy is good or it is bad. And the language of that, the binariness bothers me. It’s like asking if the 19th century was good or bad. I mean, good or bad for whom? Compared to what? The economy is like this vast, multidimensional hyperobject. It’s a little too big for good or bad. I think we need to be more precise.

This debate is not about whether the economy is good or bad. The debate is about our expectations. Given what we’ve seen before, we would expect — we did expect people to be happier with the economy than they are right now, a lot happier. One way you can try to reconcile that is you can say, the public is misinformed or misled.

There’s this Guardian Harris poll that came out a few weeks ago. It found 56 of Americans, 56 think we’re in a recession, 49 percent think the S&P 500 is down this year, and 49 percent think that unemployment is at a 50-year high. For the record, we are not in a recession. The S&P 500 is at a record high. And unemployment is at 3.9 percent, which is extremely low. So factually, people are wrong about the economy.

But it gets weirder than that because when you ask people how they’re doing, they say they’re doing pretty well. The Federal Reserve collects this data. In 2016, 70 percent of Americans said they were doing at least OK financially. In 2018, 75 percent said they were doing at least OK. And in 2023, 72 percent said they were doing at least OK. So that doesn’t look like an economy that people are experiencing in a way where they should think we’re in a recession or at a 50-year high in unemployment. And yet, people are unhappy about something.

So go back to that Federal Reserve report. By the way, if you’re a nerd who wants to read along here, I’m looking at “The Economic Well-Being of U.S. Households in 2023.” On page 10, they have this chart, which shows the main financial challenges people said they were facing in 2016 and in 2023 — inflation, living expenses, debt, retirement costs, medical costs, educational costs, employment. But in 2016, none of those get above percent, and 53 percent of people say they’re facing no real financial challenges at all. So that’s 2016.

In 2023, they ask the same question but get a very different response. 35 percent say inflation is their main financial challenge. 21 percent say basic living expenses. Only 31 percent say they’re not facing any challenges at all. So yeah, people say their financial situation is at least OK, but they also say they’re facing much more financial challenge than they were eight years ago. And they’re very clear about what those challenges are.

So I’ve been working around this big theory of the economy right now. And it’s based on something that got published in The Atlantic in February of 2020, that cursed month right before everything shuts down.

In February of 2020, there’s this big piece on what they call “the great affordability crisis.” And the point the piece makes is that a lot is looking good in the economy — unemployment is down, wages are rising, people are feeling good. But if you look at the things people really need, housing, health care, education, child care, costs have just exploded. Quote, “The spiraling cost of living has become a central facet of American economic life.”

That piece read a little counterintuitively at the time. People felt the economy was great. How could you say there’s a crisis? And people hadn’t been paying much attention to costs for a while. The big problems after the Great Recession had been unemployment, consumer demand, financial fragility. This affordability problem, it was building in the background, but it wasn’t the thing we were looking at.

But then the pandemic hit, and then came inflation. And it was like this portal of salience for prices. Suddenly, all anybody was focused on was prices. The monthly inflation report got the attention that the monthly jobs report used to get — gas prices, food prices, car prices. Then the Federal Reserve begins raising interest rates, that makes it much harder to borrow money, much harder to finance buying a home.

And so the economy reorders itself to piss you off about how expensive everything is all of the time. The price of a cup of coffee is a reminder of the cost of a house, of child care, of a car, of a movie ticket. Maybe you can pay it. Maybe your financial situation is even OK after you pay it. But it doesn’t mean you like it and you’re reminded of it constantly.

What happened is not that the economy is terrible now and it was great in 2019, it’s at an affordability problem was building in 2019, a cost of living problem. Then inflation hit, and it made prices much worse, and it made the cost of living problem much worse. And now, prices and affordability are the part of the economy that people are seeing, and they hate it.

The 2020 Atlantic piece, which has done so much to shape my thinking, it was written by Annie Lowrey. She’s a staff writer at The Atlantic and an economics correspondent. She’s the author of the book “Give People Money.” And a little awkwardly for this podcast, she’s also my wife — or I’m her husband. So you can imagine what pillow talk is like in my home, but there’s really no one for me better to talk about this with. As always, my email, [email protected].

Annie Lowrey, welcome to the show.

Thank you for having me.

It’s a little bit of an odd —

It’s a really weird —

It’s a really weird — It’s also one of the strange things about it is that we’re in a really nice podcasting studio, but we’re sitting like five feet apart from one another. So it has a little like, are we in a legal dispute?

Yeah, that’s a rich person’s Thanksgiving.

[LAUGHS] Exactly.

But unfortunate to have you here because as you know better than other people do, this piece you wrote years ago has wormed its way into my brain. And I bring it up every six months. And it’s become like the way I see the economy.

So 2020, right before the entire world shuts down, you write “The Great Affordability Crisis.” What led to writing the piece?

Both you and I became reporters during the George W. Bush administration. And I was doing a lot of intense beat reporting during the Obama administration. And throughout this entire period, and this is what people are experiencing in the economy, the economy is defined by low growth, low interest rates, low inflation, high inequality. And the primary problem that policymakers are trying and failing to solve has to do with consumer demand, with demand in the economy. The issue is that people aren’t making enough money to buy things.

This entire time, this cost of living crisis is also brewing. And you can even date it somewhat earlier, but I think probably, the aughts are a good place to start it, where the cost of — I identify four things, but there are probably five. These are costs that are big and are sticky, and that you are not transacting frequently. And the four things are health care, child care, higher ed, so higher ed debt, and then housing. And the cost of all four of those things becomes really, really brutal, not just for low income Americans, but middle income, and in some cases, even upper-middle income Americans.

And it really changes our relationship to the economy. And it sneaks up on us again because we’re in this circumstance in which the primary issue is wages and low demand.

You said there was a fifth that you would have included if you’d gone back. What was number five?

Elder care, which is a really, really big issue and has some of the same pressures as child care in terms of wages and accessibility. This is actually becoming a bigger issue as the American population ages.

Why is inflation low? Because housing is going up, child care is going up, the education is going up. So how do prices seem low to people, even as the affordability of basic — the basic items of both middle class life and upward mobility are skyrocketing?

There’s two things that I think are quite important here. So one is that you can have inflation increasing just a little bit more for these items than the overall rate of inflation. And over time, that’s going to lead you to a big problem because if these are large parts of family budgets and large parts of the economy overall, if you have inflation in health care, that’s one percentage point higher than the overall rate of inflation, you’re going to develop a problem really quickly.

The second thing is that our consumer expenditure statistics and our inflation statistics do not take into account the trade offs that people make in order to keep their personal budgets reasonable. So let’s say, as an example, that you would like to live with your partner in a high cost city like D.C., and you’d like to rent an apartment together, but you can’t. So instead, you’re living together in a group house. You probably don’t have a consumer expenditure problem on paper in terms of the amount of money that you’re spending on rent, but you really don’t like the feeling of that.

So I think especially, when it comes to housing, folks, for instance, maybe you’d really like to — you get a great job in LA and you’d really like to live there, but you have three kids and you’re like, I can’t afford that. So you stay where you are. And so your — by being pushed out to a different urban area or an exurb or a suburb, you are probably keeping your spending in line, but you’re probably pretty upset. And cost pressures are still defining your life in some sense. And so that’s why I think that these snuck up on people.

There are two things during this period that are really cheap or maybe two baskets of things. One is things you do buy a lot of. You don’t buy your house very often. You pay your mortgage monthly, but you don’t buy a lot of houses if you’re a normal person. But you do buy a lot of food. You do go to the gas station a lot.

And in this period, consumer purchasing is pretty cheap, right? Things are cheap. You can get a flat screen television for very little money, laptops, smartphones, all these kind of electronics famously come way down. And money is cheap. Interest rates are low.

How much was the cheapness of other things, the cheapness of money, the cheapness of debt, the cheapness of consumer electronics, cheapness of food, creating a sense that prices were under control that allowed some of these other things to go nuts.

Absolutely. So the consumer expenditure that people notice the most — I would say, probably, the two that they notice the most are gas and food. Gas is really important because it’s a throughput. So if the price of gas goes up, the price of other things goes up. But also people, it’s a pretty large single purchase that a lot of folks make every couple days or maybe once a week, and it’ll be like 100 bucks to fill up your tank or $50 to fill up your tank.

And food, folks tend to transact really, really frequently with that. So if you have the cost of stuff that you are purchasing in a store frequently is really pretty low, I think the perception of inflation can be somewhat lower. I think people don’t really think of health care and rent as being really important parts of inflation, but they are because they’re a big part of the overall consumer basket.

So then what connected these four or five categories — health care, housing, child care, elder care, higher ed. Give me a sense of how much prices had gone up, but why in those five? If other things are cheaper, if money is cheap, why is that set of things expensive?

It’s slightly different for each of them. So let’s take housing first, because this is the biggest one and in some ways, I think, the worst one. So housing starts currently are about 1.4 million. It’s a 1.4 million annual pace.

That’s how many new houses were —

Yeah, exactly, how many new houses are getting permitted and are going to get built. We had more housing starts in 1959 than we do now. The population has doubled. And so after the housing crisis, housing starts go as low as like 500,000. And we have a whole decade of depressed residential construction.

So we have decades of under production, and especially, under production in the high cost areas, high wage areas, where most people want to work. So San Francisco or New York are two really, really great examples of this. But we end up having a housing shortage everywhere, and it means people aren’t living where they want to be living, and it means that people are paying a tremendous amount for housing.

So right now, the median sales price for a single family home is six times higher than the median household income. That’s the highest ratio of any statistic that we have. That’s from the Harvard Joint Center on Housing Studies. The number of cost burdened renters. so folks who are spending more than 30 percent of their income on housing, has gone up to a record 22 million households. 12 million American households are spending more than 50 percent of their income on housing.

And so this is a problem that, again, you get over the course of decades. And the cost of housing increases the cost of everything else because businesses pay rent also, and folks need to have wages that cover the cost of housing, right? So there’s that.

Health care is somewhat different. So the health expenditure to G.D.P. ratio in the United States is 17 percent. It’s a little bit less than double the O.E.C.D. average.

So the percentage of our economy that goes to health care.

Exactly. And we don’t have better health outcomes than other countries in the O.E.C.D., we just literally pay more. And so in 1990, the health share of G.D.P. is 12 percent. And it starts just this long, slow climb.

And so there’s actually some good news in health care, which is that the share of G.D.P. that is spent on health care has actually been somewhat flat since the Obama administration. This is great news. The problem here isn’t really inflation, it’s the level. We’re just paying an extraordinary amount for health care.

One of the ways that this is burdening folks is that out of pocket costs controlled for inflation have just gone up and up and up and up and up slowly. So the average person is now paying about $1,400 a year on out-of-pocket health costs. And that’s despite the fact that we have a large share of our population on Medicaid, where out of pocket costs are seriously, seriously controlled.

Yeah, I think of this as the paradox of health care spending, where one way we got overall costs down was we shifted costs onto people. So on the one hand, if you look at health care spending as a percentage of G.D.P., it looks like it is not going up as fast as it was before. And that’s actually true for a bunch of different reasons.

But one way we also got health care cost increases down is to just make people pay more out of pocket. And that does have an effect of getting people to forego both some unnecessary care and some necessary care. But to people, it doesn’t feel like they’re spending less. They are noticing themselves spending more, so they’re pissed about it.

This was always a problem with the Obamacare bending the cost curve idea in the end. What people wanted was to spend less on health care themselves, not for the entire country to spend less on health care. But the way we got the entire country to not see health care costs grow so much was to make people pay more out of pocket, and that makes them mad, not happy.

Absolutely. And the costs are just really high — the costs for surgical procedures, the cost for prescription medication. I’m a type 1 diabetic. I take insulin. Insulin is nine times as expensive in the United States as it is in most of our peers. It is a 100-year-old drug, it is not a new drug. It’s literally 100 years old. Why is it nine times the cost? And I think that we are starting to see some movement towards cost control, but it’s just been really hard in the United States.

So then child care. So child care for zero to five, this is a cost that families are paying for relatively short time in their lives. And it is absolutely, absolutely crushing. Average child care costs for a year are between $18,000 and $24,000 a year. And the problem is not just with how much people are paying, it’s that people don’t pay. A lot of folks cannot afford that. And we do not have enough coverage through programs like Head Start. Head Start is severely underfunded. One in five kids who would qualify for head start, gets head start.

And so folks drop out of the labor force. They rearrange their work schedules. They get family members to help. And the issue is that we have basically maxed out what people can afford to pay, and that still doesn’t mean that child care workers who are among the lowest paid in American life have a living wage. Most child care workers are still making $14 or $15 an hour, it’s just not enough.

And so we just, as a country, don’t spend enough on this. U.S. devotes about 0.3 percent of G.D.P. to early childhood education, that’s less than other O.E.C.D. countries. Another way to think about this is that we have about a 20 to 1 ratio of children under the age of four to child care workers who are aimed at that set. Canada, for instance, it’s 6 to 1. So the issue is that we are not spending enough public money on this to make it affordable, and folks are just paying absolutely obscene amounts.

I had a sociologist on a couple of months ago, Caitlin Collins, who did this great book, looking at parenting and work in a bunch of different countries. And the thing that is seared into my mind is her saying that in Sweden, the cost of child care is capped at well under $200 a month, capped. You just can’t pay more than that. And everybody can get it for that.

It’s absolutely wild. Whereas, here, we’ve said that affordability should be at 7 percent or less per month. Just nobody pays that.

So then there’s higher ed.

Then there’s higher ed. So a really important note here is that folks with college degree have seen really important gains in the labor market. They’ve had higher wage and earnings growth, higher wealth growth than people without a college degree. And so there’s been this long debate about like, is it worth it? And the answer, broadly, is yes.

That said, we have about $1.7 trillion worth of outstanding student loan debt, not all of which will get paid back, but a lot will get paid back. 43 million Americans currently have student loan debt.

Prior to the pandemic, the typical payment was 200 to $400 a month, which might not sound like that much, but is a lot. Add that to rent, add that to whatever you’re paying out of pocket for health care, add that to child care, if you have children, it really, really adds up.

So folks making student loan payments, for instance, they have a lower savings rate for retirement. They have smaller balances in their 401(k)s. They’re likely to delay homeownership because they’re paying their student loan debt. And I think that we’ve started to see a tremendous amount of movement on this. So the Biden administration has given forgiveness to roughly four million borrowers. It’s about $140 billion worth of student loan forgiveness. Nevertheless, this remains a really, really big problem. So these are the four things that I identify that they’ve just created this cost crisis where folks feel like they’re just sprinting to stay in place.

So one of the ways you would frame that piece, that was part of why it struck me at the time, was that everybody was really happy about the economy in early 2020. You have this line up top where it’s like, some of the best years the economy has ever recorded, people are getting bled dry on all these dimensions. If all of that was as bad as you’re saying, and it was, why aren’t people more upset in February of 2020?

There’s a few things. So one is that directionality matters quite a bit. If things are rapidly improving or are falling apart, deteriorating really quickly, that’s going to matter more than a steady state. And here, I think that you are seeing a reversal of some of the trends in wage and inequality that we’ve had for a long time. That’s changing. And I think that people react to that.

The other thing is that the cost of living crisis that I had laid out, it built very slowly over decades. It’s a boiling the frog thing where just extremely, extremely slowly, you start to see all of these things ratchet up. And again, it’s a crisis not of inflation, not of change, it’s a crisis of level at that point.

And so I think that people, it’s less front of mind. The salient things about the economy are the wage gains. These kind of long standing problems are not quite front of mind for people. And things are getting better in a really noticeable way for folks.

I want to pick up on a word you just used, which is “salient,” because this has been — my motivation in this conversation a bit is trying to think about the economy and the politics of it this year, which we’ll get to. And the thing that keeps coming to mind is this question of salience, which is, we can’t hold the whole economy in our head, even in periods when we say there’s a really good economy, it’s bad for a lot of people. Millions of people are in poverty. Millions of people are losing their jobs. Periods where there’s a bad economy, lots of people are starting businesses, people are still getting rich. In a very complicated way, we have to choose what to pay attention to.

And part of my theory of this, having been an economics reporter during that period, is we just weren’t paying much attention to prices. We were paying so much attention to unemployment. We were paying so much attention to wages. We were paying so much attention to inequality. And prices had been really stable in most things for a very long time. Interest rates were low. Most consumer goods were low. And yeah, there were some problems building in housing. We did pay a fair amount of attention, actually, to health care prices. That was a lot of the Affordable Care Act debate. And you would hear people debate higher education prices.

And then the pandemic hits and everything scrambles for a while. And then inflation comes. And inflation makes prices salient. And even now, as inflation eases, that doesn’t stop.

Tell me a bit about how, actually, at this point, you understand the inflationary period we just went through, but also, how you understand the debate about whether or not it is over.

So to give a little bit of a historical perspective on inflation, inflation is really high when Ronald Reagan comes into office. It’s like 13 and 1/2 percent. Then it goes on this long, slow whoosh down through the George H.W. Bush administration. And it’s in a 2 percent to 4 percent range from George W. Bush, Obama, it’s really low, it’s less than 2 percent.

So you have this long period of quietude in which consumer prices, overall, are not changing that much. And the cost of some really important consumer goods, things that people are transacting for on a day to day basis actually go down. Electronics are the most notable example of this. But as a general point, you have this extremely long period of time in which stuff and basic services, things like haircuts or whatever, it’s all really cheap. It’s really, really cheap.

And what happens is in the first half of 2021, we see price increases concentrated among a relatively small set of items in the basket of things that the government looks at to determine the Inflation rate. So energy and car prices go up. You start to see really spiking commodity prices. Then you have this two-year period in which there’s giant spikes in almost everything. Food at home spikes. Food away from home, it spikes. Gas prices go up, natural gas prices, electricity prices. Shelter prices don’t increase in the way that food prices do, but they increase a lot, and they’re so expensive that that really matters. Commodities outside of food and energy go up. So it’s really, really unbelievably broad-based.

And so now, we’ve seen inflation, overall, come down from a 9 percent annual rate to a 3 percent annual rate. But basically, what it did, it was big enough to create this phase shift in prices. And prices don’t really go down. It’s really bad when prices, overall, go down, because it means that people stop spending because why would you pay for something now if you could wait two weeks and the price would drop? I think that there was almost just no muscle memory of it. And folks got really, really, really mad. And the fact that wage gains were enough to cover it, people just didn’t believe it.

How good is our measurement here? How sure are we that the median American or the median working class American has more money, after all their bills and spending today, than five years ago?

I wouldn’t say that statistics are perfect because what an individual family is purchasing and the trade offs that they’re making to keep themselves in budget, it’s really hard to account for all of that. But I would say that generally, our inflation statistics are pretty good. What happens is that we collect prices on a set of items from all around the economy, and then we tabulate them, and we put them into this basket of goods. And then we note the changes in that over time. And we have many alternative measures of inflation.

One thing that I would note is that there’s evidence that the Inflation experienced by lower income families has actually increased faster than higher income families because goods have gotten so much better, and there’s been so much more production aimed at high income families than low income families. So I just want to caveat that. But no, our data is quite reliable, showing that accounting for inflation, families have come out ahead and real consumption has gone up. So the amount of stuff leaving aside prices has gone up.

Inflation is just one statistic. And consumption is just one statistic. And I think that you need to look at a more holistic understanding of what people are spending money on, what they’re getting for their money, and the trade offs they’re making to keep themselves in budget.

I remember talking to the Biden economists when they came in. This is 2021. And they were thinking a lot about how to get to full employment, how to run the economy hot, how to accept the trade offs of running the economy hot, how to get wage gains up, how to make sure you were running at full employment for long enough that wage gains got to the poorest workers, wage gains got to Black workers, wage gains got to Hispanic workers. It’s really fairly easy to get wages up for rich people, but it takes longer in a hot economy to get them up for poorer people. And they actually do a great job in a way on full employment. I mean, it’s amazing that unemployment is still under 4 percent. It’s amazing that wage gains have grown so quickly for the poorest workers. But they don’t really have a genuine basket of ideas early on to say nothing of political rhetoric for what to do about costs. They rename Build Back Better the Inflation Reduction Act. But it’s not really an Inflation Reduction Act, it’s a green energy spending act with some Medicare drug pricing and Obamacare subsidies thrown in.

And this, I think, actually is a fairly big problem. It takes a political system time to adjust to a new set of problems. The player that does adjust is the Fed and begins raising rates, but people don’t enjoy having interest rates go up.

And this gets, I think, to something that Larry Summers and others have been pointing out, which is that our measure of inflation has come down. Inflation tracks how much prices in these different things are going up. But the prices of the things have not come down. And our measure of inflation doesn’t track interest rates. So what people are paying now if they want to get a mortgage, which is much more expensive, if they want to be paying off credit card debt, education debt, any kind of new debt, the price of money is meaningful.

Summers and his team estimated that if you put that into inflation, it goes from roughly, some months ago, 3 percent to 9 percent for people. Do you think there’s something to the idea that actually, the inflation problem isn’t over, that if you’re a family, that because of what you’re paying now for money — you’re paying the high prices of inflation, now you’re paying the prices of higher money, and so actually, to you, it hasn’t really changed that much?

So it’s really important to note, as you did, the cost of borrowing is not included in common price indices. And so in 30-year mortgage rates, they’re close to 7 percent now. The country’s median mortgage rate is just a little bit more than 3 percent. So if you’re trying to get a mortgage now, it’s just blankly unaffordable. You have to buy less house in order to get your monthly price to be the same.

Purchasing a car. About half of folks who purchase a car use financing. And the rates for that are above 8 percent. And so I think that this explains a lot.

I want to go back to something you said, which is that we actually have a tremendous policy toolkit for increasing demand. We can send out stimulus checks. We can do things like sending out child tax credit payments. We can expand the unemployment insurance system. All of these things are things that we did during the Covid recession. And just in general, we can increase the value of the earned income tax credit. There’s a million things that you can do.

On prices, we have a very anemic toolbox. And the problem is that if you have high prices caused by shortages, by things like under-building, a lot of the solutions for that are, A, long term, and B, themselves temporarily inflationary. So if we were going to build a ton more housing in order to bring down rents, if we were like, we are going to solve the housing shortage, we’re estimating at five million units, we’re building five million units, you would create a lot of inflation because that would be just so much additional building. The price of materials would go up. The price of wages would go up. And so I think that we’re in a really tough spot.

So if you’re in the White House, what can you do about inflation? You can release gas from the strategic reserve, which they did do, in response to the Russia-Ukraine conflict. You can do more negotiating on prescription drug prices, which they’ve done. You can do some stuff on antitrust to make companies compete more and to lead to lower prices. But that’s not a really quick fix. And a lot of that is instead going to prevent price increases in the future rather than bringing prices down now. You just don’t have a lot of great options.

And it’s why I think that you’ve seen the Biden administration doing things like tackling junk fees, which are right, there are costs that people pay, and at least, you can get a little bit more traction there. And it’s not, this is not a complete list of ideas and a complete set of things that they’ve been doing. The point is that it’s pretty easy to juice demand. And it’s hard to affect supply and hard to affect prices with the economic tools that we have that are readily there.

Yeah, one thing that’s really striking in the housing market, and you wrote this slightly devastatingly titled piece, “It Will Never Be a Good Time to Buy a Home.” One thing that is striking about the housing market is we turned up the dial on interest rates really quite high by recent historical experience, and prices of homes kept going up. They really show us how bad the supply crunch is, that prices are up, what, like 50 percent over the course of the — since before the pandemic. So now the borrowing cost is much higher, but also the price of a home is much higher.

And yeah, a lot of people have a mortgage from before, but that means they can’t sell because to sell would mean that you have to then buy your new home at this higher price with this higher interest rate. And so also, you have all this supply being kept off the market. The housing market seems really quite broken to me.

And housing, I think, has a pretty outsized effect on how people feel about the future. Young people who are not trying to buy a house right now but want to in the next 5 to 10 years, think about housing. It affects how they feel about the economy, even if they’re not in the market for it right now.

Parents who see their kids not being able to buy a house, that matters to how they feel about the economy. Housing does, sometimes, feel like this master price to me that affects everything. And the level of brokenness there feels quite profound.

Absolutely. Because what’s going to happen when interest rates go down is a bunch of people who have their down payments ready are going to flood back into the housing market, and they’re going to hold prices at the same level or maybe even push them higher. Unless you’re in a world where there’s more supply over long period of time, I don’t see the fundamentals changing, even if prices and levels might go up and down a little bit. We have a very big hole to dig ourselves out of.

The only good thing I can say about it is that you have a lot of political figures who really care about this now, and you have both blue state and red state governors who are really starting to take this seriously. For the first time since I’ve been a policy reporter, you have folks starting to say something like, how can we get everybody on the same building code? What can we do to create carrots and sticks so that places will allow dense construction? And we didn’t have that for a really, really long time.

I actually remember, after the housing crisis, when housing economists started to say, we’re underconstructing. And I remember, at the time that they started to say that, being like, what is wrong with you? What are you talking about? How could this possibly be an issue? But they were completely correct, because the problem actually started before the housing crisis. In some cities, we start underconstructing in the 1970s.

So you have prices way up, basically, on everything now. So prices went up for every good. The affordability crisis set of prices has been up and went even higher post-pandemic. The price of money is way up. And at the same time, you have this debate about whether or not the economy is really great or something is missing. You have these measures, these predictions of what consumer sentiment will be like, given an inflation rate and given an unemployment rate. And they show consumer sentiment should be really high if it is tracking historical trends.

You have this endless back and forth about, well, on the one hand, people say their own personal financial situation is pretty good. On the other hand, they say that the national economy is really bad. People seem to think we’re in a recession, but they don’t look financially like they’re in a recession.

Why has there been this sense of confusion? We’re laying out this whole theory of prices. It just looks really bad. And on the other hand, a lot of economists have been scratching their heads over why people are so upset. So what accounts for the head scratching response?

We’ve talked about this, but I think it’s important to stress. Wages have gone up more than prices, and that is particularly true for lower income folks. So if you are in the bottom decile of earners, your real wages, so wages adjusted for inflation have gone up 12 percent since 2019. If you’re in the highest decile of folks, it’s just about 1 percent. So real consumption, meaning, consumption holding prices constant has increased about 10 percent over the past four years. We are buying more stuff.

And if you look at levels of — measures of material hardship, those have been going down. And that’s not to say that there aren’t problems. I also believe that inflation, A, it was kind of a surprising change for folks, and B, there are some economic facets and behavioral economic facets of it that make people particularly angry about it.

So one is that unemployment is absolutely devastating for the folks who experience it. But even in an enormous, terrible recession, perhaps, 1 in 10 folks who wants a job will be unemployed, whereas inflation affects literally everybody. In an economy, and when I talk to people, inflation is much more pernicious for lower income folks because they’re really spending every dollar that they have on basic necessities, and for higher income folks, that’s not true. But you can talk to really rich people and they will be mad about inflation. They are mad about how much they are paying for things. It’s just universally enraging to people.

And there’s this perceptual problem. So the economist, Stefanie Stantcheva, who is at Harvard, who has found that Americans believe that their purchasing power is falling in a world in which there’s a lot of inflation. About four in five respondents to this survey that she conducted said that prices systematically increase faster than wages. That means nobody’s really getting ahead. This is not true, but this is what people think, real consumption and real wages are up.

And her polling also shows that folks blame corporate greed. They blame Washington for inflation. They don’t see it as a function of input prices, energy costs, supply shortages, rising wages. And they also don’t see inflation as part of any kind of an economic trend that’s positive, including their own wage gains, even though their own wage gains are partially a product of inflation.

I want to hold on that. How does somebody experience a wage gain? Your boss calls you into the office and says, we’re giving you a 6 percent, a 5 percent, a 7 percent raise. You’ve done great work. Thank you for everything you’ve done. Or you go look for a job and are able to bargain a higher salary than you were able to do before. That feels like something you did. I got a good raise.

And inflation feels like something happening to you. I got this raise. I’m making $2 more an hour than I was. And inflation is eating 80 percent of that. Inflation is a bad thing happening to you. And wage gains are a good thing you did. And the fact, frankly, that any of your wage gain is getting eaten by faster than normal inflation or prices that you have not in any way adjusted to, it’s really maddening.

Absolutely. And look, the reason that interest rates are so high right now is to get inflation down because inflation is economically destabilizing when it’s too high, and it’s socially destabilizing. This is really well known. And again, you can tell people over and over and over again that they’re better off, but if you have inflation rates at 9 percent, people aren’t going to listen to you. They don’t like it. They don’t want to have to do mental math every time they go to the grocery store.

And when I talk to people about why they think the economy is bad, the first thing that people say to me, often, is, lunch at Chick-fil-A is $15. And lunch at Chick-fil-A being $15 is neither here nor there in the grand universe of what people are earning and paying for, but it’s a price that people notice, and it really ticks them off. The other thing is inflation has come down. It’s going to take a while for people to believe that. And one thing that I do think is changing now is that you are starting to see companies really start to compete for consumers on price. So both Burger King and McDonald’s have set out these $5 value meals. And Target said that it’s cutting prices for 5,000 frequently purchased items — things like diapers, and cat food, and dog food.

And we’ve been in this million, which prices just feel like they go up, and up, and up, and feel people feel like they’re not getting a break. And already, you’ve seen consumer sentiment start to tick up. And I think that companies engaging in price wars will actually have a pretty profound effect for as long as it sticks around for.

How much do you think the high prices of the small things act as a constant reminder of the high prices of the big things, which is to say, in a world where you know that health care, and housing, and education are incredibly expensive, how much does the fact that Chick-fil-A is $15, that a cup of coffee is $7 act as this constant salience portal to keep you thinking about this thing that is making you mad all through the economy?

I think this is really important. So let’s say, as an example, the average American adult makes a purchase two or three times a day. And some people make purchases way more frequently than that. And a lot of families make purchases less often. They get gas once a week. They get groceries once a week and maybe a few other little things.

And so if two or three times a day, you are being reminded of the fact that your money is going less far than it used to be, I think that you’re going to be pretty angry about that. So one in three Americans eats something from a fast food restaurant every day. And about two in three Americans eat something from a fast food place once a week. It’s just really, really, really common. And the prices for fast food went up a lot. And I think that that contributed quite a lot also. Americans are currently spending more than 11 percent of their income on meals. That’s the largest share since the 1990s. So I think a lot of this is about food and restaurant costs going up quite sharply.

Between the summer of 2021 and the summer of 2022, grocery store prices go up nearly 14. And the cost of some grocery store staples — so dairy products, things like sugar and oil, cereals, it’s more than percent. And so I think that for high frequency items, all of a sudden, you just get this blasted in your face again and again and again. And even if you’re not spending that much overall on these things, I think it’s basically just tapping your shoulder over and over and over again and saying your money is going less far.

Whereas, even something like rent, which people complain about and talk about all the time, but it usually gets set once a year and you pay it monthly, so you’re reminded of it less frequently, even though that’s a much bigger line item on the budgets and fundamentally, I think a much more problematic part of the economy. And notably, rent goes up a tremendous amount during the pandemic. It’s a nightmare. It was really expensive. It’s even more expensive now.

One of the things that economists will say when they’re pushing back on the idea that how people feel about the economy is merited, I think that’s actually the right word for this pushback, is, look, if it was so bad, people would be changing their behavior more than they are, that people are still going out to eat a lot, they’re still buying a lot of food out of the house, that we see what it looks like when people are under very high levels of financial stress. And they make different decisions. Their consumption patterns change really radically. If you lose your job, you don’t keep spending in the same way.

But my sense from them is the consumption data has been pretty stable. And that has been a confusing thing to economists in this period. Inflation should lead to a lot of changes in how people act. It’s not led to very many changes in how people act, but it has led to a lot of anger from those same people. First, is that true? And second, how do you read the both reality and politics of that consumption data?

So if you have price increases and just cost pressures within families, folks tend to make some pretty predictable responses. So one is that they purchase fewer items per shopping trip or they might reduce the number of shopping trips. So folks have not really cut the number of shopping trips much, but they have reduced the number of items that they are purchasing when they go get consumer packaged goods.

The second is that they’ll trade down. So you’ll go for Kirkland rather than Pampers. You will go for Aldi rather than Wegmans. You’ll go camping instead of going to Disney. And folks are doing that. But the main way that consumers have responded is just by paying higher prices. And you can actually go back and look at company earnings calls. The corporate executives themselves are like, well, we kind of keep on testing the water and we’re not seeing much effect. So we’re going to keep on pushing prices upward.

We’ve not seen a dramatic pullback in luxury goods shopping, or travel, or jewelry, all of those things that you would expect to be the first to go because people give those up and they keep on purchasing food. People are just mad about it, but they kept on paying. I do think that that has changed a fair bit recently.

So one is that we’ve started to see a really big increase in credit card balances and an increase in delinquencies. And so that’s some evidence that lower income consumers are starting to get stressed. And they’re putting things on their credit card rather than being able to pay for them themselves. And again, we’ve also seen these companies be like, OK, we’ve tapped out, we’re going for the value meal. We’re going to try to get consumers an increase foot traffic by competing on price.

And so it’s important to note that the costs for big box stores, for fast food restaurants, you’ve had a really big increase in labor costs. You had a lot of big increases in input costs. And both of those things have calmed down. But I do think that we’re in this period where probably, this is as much as folks can safely spend.

You mentioned a minute ago those corporate earnings calls, where C.E.O.s would be like, look, we’re raising prices, people are still paying it. We’re going to raise prices again. One of the more popular explanations among more left-leaning people for inflation was what got called greedflation, which is, there wasn’t really a problem here, except that corporations were taking advantage of a weird moment in the economy to do huge markups. Was the greedflation theory correct or how do you understand that part of it?

I certainly don’t think it was the only thing going on, if it was part of what was going on. The cost of labor really went up. It started going up when you started to have increases in local and state minimum wages, which begins during the Obama administration. Then you have a really big increase in wages for lower income workers that starts around 2018. And the pandemic actually intensifies it quite a bit. So there’s that.

And then input costs go up too. And so the way that companies are going to respond to that is by passing that on to consumers. I do think that there was a moment where companies basically thought that because of inflation, they could increase prices even more, and in this miasma, people would pay it. But I don’t think that it was exclusively corporate greed. I would note that corporate bottom lines are looking pretty good right now, despite the fact that you have really high interest costs and these increases in costs more generally. So I don’t think it was the only thing.

Sometimes, I think the problem with the greedflation thesis was simply the name. Greed made it sound like they were doing something evil, when what corporations do naturally is try to find the price at which they can balance market demand and the highest profits they can possibly make. But it was true that there was more room for them to raise prices than I think they had thought in 2020. And things that you might have thought would happen, like really intense comparison shopping or intense use of coupons didn’t happen.

And it does seem to me that one thing that occurred was a step change reshuffling of prices. And now, consumers are stressed enough that you’re beginning to have price wars bringing things down in certain areas. You mentioned Burger King, for instance, and Target trying to think about how to bring in more budget-conscious consumers.

But there was this period where they’re pretty open about this on earnings calls. And I don’t think the right way to understand it is greed. Corporations trying to earn profits is what corporations do. But it turned out that there was a zone of price increases you could inflict on people, where instead of them changing their behavior, they would get really mad. And that feels to me like the economic zone we’ve been in for a little while. The person paying the cost on this is Joe Biden, not Target or Walmart or McDonald’s, but people are mad about it. It’s just like, the corporations actually did this adroitly enough that they didn’t lose a lot of demand, they just pissed people off.

There is a really interesting raft of studies that has come out in the last five years from economists that show that American consumers have gotten less price-sensitive. So when prices shift, consumption doesn’t shift like we would expect. It doesn’t shift like it would used to. And these studies are mostly looking at consumer packaged goods, consumer goods.

So other ways that we think that households have become less price-sensitive, people are using fewer coupons, they’re spending less time shopping and comparison shopping. So why might this be true? One is just that stuff is cheaper, thanks to globalized trade and manufacturing advances. The second is that people are wealthier. So you’re just less price-sensitive when you’re richer.

Third is women in the workforce — so it used to be much more common for one partner to work and the other to spend the money. And so you would probably have that time, it would be part of your job as a household worker to comparison shop. But now, given that so many prime age women are in the workforce, there’s less time for them to do that. Consumers seem to have gotten more brand loyal is part of this, that’s one theory.

And another theory is that it’s just inertia. People have gotten older. And they tend to have this inertia that they will be less likely to try new things, buy new things as they get older. And so you just always buy the Starbucks coffee, so you’re going to keep on getting the Starbucks coffee.

I also think there’s some chance that targeted advertising and dynamic pricing has something to do with this, but I don’t know. It’s just a really interesting shift that I’m not sure that we completely understand and completely understand the implications of yet.

I want to shift then into the macro politics of this. And I want to separate two pieces of it, which is how people feel about the economy and how those feelings about the economy translate into politics. But one thing that you’ve been doing pieces on for many years now is the rising way in which partisanship shapes perceptions of the economy. Tell me a bit about that and how it might be playing into this period.

So there’s something called the Partisan Economic Expectations Gap. And basically, what this shows is that if you are a Democrat and there’s a Republican in the White house, you’re much more likely to think that the economy is bad. And that’s true, even holding economic conditions constant.

And the flip is also true. This happens for both sides. It’s not an asymmetric thing. If you’re a Republican and Joe Biden is in the White House, you’re like, this is a terrible economy. We need that guy Donald Trump back.

And this had the effect of somewhat divorcing folks opinions about the state of economy from the real state of the economy because it’s become so political. It has also narrowed the band of consumer expectations because people are not changing their minds about anything anymore. You just have way more strong Democrats who say, economy is good right now, and way more strong Republicans who say that it’s bad. This is happening at the same time that we have growing evidence that real economic data might be less predictive in elections than it used to.

But one thing happening in Joe Biden right now is that you do see this huge partisan economic expectations gap. But also, Democratic views on the economy are not as positive as you might think if you were taking that model from a couple of years ago.

There’s something weird happening among the Democrats. They’re not giving Joe Biden the economic pass that you might expect from what we’ve seen in that data before. Why do you think that is?

There’s two answers, and I don’t know which one it is. One is that they don’t really like him. Joe Biden is a somewhat less compelling politician for Democratic partisans than some other folks are in terms of his ability to stir the electorate and increase things like turnout. I think he’s a somewhat less vigorous campaigner than we’ve seen. And I think that he has somewhat lower favorability ratings and higher unfavorability ratings among his own partisans than we’ve seen in the past.

The second is that inflation is hitting them, and they’re just subject to the same forces that everybody else is in the economy. So Democrats are somewhat clustered more in the Northeast than on the Western coast, where you’ve seen really large increases in specifically, housing costs. But then you’ve seen urban housing costs go up everywhere. And so to the extent that we have all of these blue islands, that’s exactly where the prices have gone up, and it’s been really, really, really pretty bad.

That said, I do think that over the past, call it 10 years, you’ve started to see the housing crisis spread to communities that we would never think of as having won before. Rural areas, you’ve seen really dramatic increases in housing costs. Ex-urban areas, you’ve seen dramatic increases in housing costs. It’s everywhere now.

I would note that the mediating influence of the news media probably matters here quite a bit. So we know that holding economic conditions constant, media coverage of the economy has gotten more negative. And it’s especially more negative in social media where a lot of folks are now getting their news.

And I don’t think that that’s entirely the fault of journalists. People seek out bad stories, that’s what people want to read. So these are all headlines that have come out recently about household financial health and consumer spending — Americans keep on spending, but big retailers doubt it’ll last, Slump in big purchases clashes with government’s strong consumer data, Americans are still spending like there’s no tomorrow, Americans plan vacations even as they sour on the economy. These are all great stories. I’m not picking. These are all great. They’re really, really sensitive and really well-reported.

Does this media explanation actually feel true to you? Because here’s what I have experienced, as a person who writes about the economy, is married to a person who writes about the economy, and works in a place full of people who write about the economy, what I noticed happening was there was all this very sunny coverage of the economy, and everybody doing it was getting yelled at.

You write something about how the economy is actually looking really strong or we’re avoiding that recession or something. And people just got slammed by their audiences. They got slammed as out of touch. I don’t want to blow up your spot here, but you’ve written some pieces saying like, this economy’s actually pretty good. My sense is the reader feedback on that can be spicy, sometimes.

And I feel like the media got whipped by its audience a little bit into taking at least, some portion of the audience’s economic experience more seriously, which I’m not saying is a good or a bad thing, I think it’s a complicated thing. But it isn’t my impression that the economics reporting profession wanted to be negative on the economy. It’s that when they started covering the economy positively, what they heard from their readers or viewers or whatever, and then what they saw in the polling data, how people actually felt about the economy, was that people were not experiencing the economy positively at all.

I’ve seen the media in periods when we want to cover the economy negatively because the data is really negative. And that has not been what I’ve noticed happening here. In fact, I see a lot of stories about why aren’t people happier, given all this good economic data? And then all these people yelling at the author of those stories, explaining why it is that they’re not happy.

I think that people’s understanding of inflation is not economists’ understanding of inflation, which is something you were just trying to. I think it is real that people feel extraordinarily taxed by high prices. And the fact that the prices have only gone up 3 percent, they just went up 10 percent. I really credit that because I think that people are experts in their own experience. And I think what people are experiencing is really, really important.

Nevertheless, it feels to me important to point out that inequality dropping, that’s amazing. Declines in child poverty, that’s amazing. This is going to sound, perhaps, simplistic, but we have a gigantic economy. We’re not like Germany, where the entirety of the E.U. And so there’s just always a lot happening. And it can be hard when you’re doing these big gestural stories about the big headline statistics. You’re constantly missing things that are happening in this really vast, really, really, really diverse, really politically diverse, racially diverse, ethnically diverse country in which there’s really, really big problems.

People are allowed to be mad at stories. And I think you just have to hew to the complicated economic truth of any situation. It’s why I actually think that a lot of those headlines are correct. But I think that that leaves a lot of space for people to read in their partisan priors or read in their view of things.

I want to go back to another explanation you offered a second ago, which is the question of whether Democrats like Joe Biden enough to look at the economy through their feelings about Joe Biden. So I’ve been thinking a lot about 2012 and going back and looking a lot at the 2012 data. And I think just inarguably, the economy was just much worse in 2012. I mean, unemployment in May of 2012 was 8.2 percent.

8.2 percent, really bad.

I remember covering the monthly jobs report in 2012, and just I assure you that economic coverage in the media was much more negative then. And Barack Obama was leading Mitt Romney by two points in the real clear polling average. So you have a much worse economy and you have the Democratic incumbent leading.

And the way that the economy figures in to politics is not a one to one like, I like the economy, so I like the incumbent. That’s not how people think about it. You often have incumbents governing in an economy that is recovering from something bad happening to it. That was Reagan in 1984. There had been this big recession, the Volcker recession in ‘81. Reagan and Republicans have a really bad midterm election in 1982. But by ‘84, things are kind of getting better. I mean, they’re worse than they are now — unemployment is higher, inflation is higher, the interest rate is higher, but Reagan makes a morning in America argument. And people credit him with a comeback that they feel is happening.

In 2012, the economy is quite bad, but Obama is making this argument, it’s made very aggressively at the convention that year, that the entirety of the financial crisis wasn’t on him, obviously. And he’s a smart, thoughtful guy who cares about people like you. And he’s got the best economic people around him. And Mitt Romney’s a plutocrat. And you should trust Obama to manage a comeback. And that’s ultimately a winning economic message.

And the thing you’ve been seeing this year, I think, is people not, as of yet, at least, being willing to extend that trust to Joe Biden. When you ask them, they say, they trust Donald Trump on the economy more. But just in general, I don’t think that the argument the administration or Biden himself has been able to make, at least, in enough forums that people are seeing or hearing it, is giving people a sense like, yeah, this guy has it under control. I’m not even sure liking or disliking is the right way to think about it, it’s the has it under control dynamic.

Donald Trump’s pitch is, the economy is good when I was president until the pandemic hit, and I’m a strong man who will jawbone the prices down and cut good deals for you and something, something, something. And Joe Biden’s pitch, I think, has been a little bit more complicated, but also, just the impression he gives off due to age and maybe the way they’re campaigning is a little less energetic. And that feels to me like it is mattering here.

Obama wins at a time that you have a housing crisis that creates a global financial crisis. And I think that we, sometimes, forget that the first domino, the first big thing that happens is you have these dramatically elevated property seizures between 2007 and 2010.

Yeah. So you’re saying he wins in ‘08 this way.

Yeah. Exactly. 10 million families lose their home. 10 million families. He comes in. And George W. Bush and his administration own that. Obviously, the American Reinvestment and Recovery Act is way too small. There’s some questions about whether he should have pivoted to the A.C.A. or not, and I don’t know about the counterfactual there. But by 2012, things are getting better pretty significantly.

And Mitt Romney, notably, he’s like a fancy finance guy at a time that inequality is really, really high, and inequality is the problem, and rich families are rebounding and low income families aren’t. And so Obama is able to make this pretty compelling case. Do you want the bain guy who laid a bunch of you off? Do you want him running the White House? And that economic argument makes sense.

I think that personalities matter here a lot, right? Obama was like a once in a generation political talent who was extraordinarily good at campaigning. For folks who didn’t get to see him, he was magnetic up there. And Joe Biden right now is just a less vigorous campaigner. Donald Trump, I think, just has he’s unusual in running to unseat an incumbent in the sense that he was president himself. It’s just a strange election in that way. And he’s also pretty good on TV. He’s a celebrity. And I think that he’s been capable of making this argument of, yeah, it was better back then, even though I’m not even sure that it was.

So Biden gave an interview to CNN a couple of weeks, a month ago, something like that. And it was very much an economics interview. So why don’t we play the way he’s messaging this?

Economic growth last week, far short of expectations. Consumer confidence, may be no surprise, is near a two-year low. With less than six months to go to election day, are you worried that you’re running out of time to turn that around?

We’ve already turned it around. Look at the Michigan survey. 65 percent of the American people think they’re in good shape economically. They think the nation’s not in good shape, but they’re personally in good shape.

The polling data has been wrong all along. How many of you guys do a poll with CNN? How many folks you have to call to get one response? The idea that we’re in a situation where things are so bad, the folks — I mean, we’ve created more jobs. We’ve made — we’re in a situation where people have access to good paying jobs. And the last I saw, the combination of the cost of inflation, all of the things, that’s really worrisome to people, with good reason. That’s why I’m working very hard to bring the cost of Reynolds down, to increase the number of homes that are available.

But let me say it this way, when I started this administration, people were saying there’s going to be a collapse in the economy. We have the strongest economy in the world. Let me say it again, in the world.

What do you think of that?

As a reporter, I don’t argue with people’s perceptions of how things are. But I think it’s a political problem that he and other Democrats have run into. They feel like they’re being gaslit, if you say, well, you’re coming out ahead. That’s just not how people feel.

I am not a person who thinks a lot about political messaging, but I’m not sure that the Biden campaign has hit on the economic message about how it’s going to be better tomorrow. That is really resonating with folks.

I was struck when I saw that interview because that interview took place in an economic setting, I forgot, it’s like a factory or something. So they clearly had set it up to be an economic interview. And the question that Erin Burnett asks there is extremely obvious, right? Put anybody in that interview chair, you’re going to get a question like that about the economy.

And I don’t want to say Biden didn’t seem ready for it, but he didn’t seem to have an answer ready. There are a couple different answers happening in that answer, and he’s not really settled on one. There’s the — actually, we have the strongest economy in the world, which is true. I mean, in a lot of ways, you look at America compared to other countries right now, and we look great. We look way better than China, which is not true for a while. We look way better than the countries in the European Union. We look way better than the UK.

There’s also the, actually, this has all turned around and you all just haven’t felt it yet, very, very complicated case to make. He goes on to make some points about trying to crack down on junk fees, that kind of thing. What I heard there was, they haven’t decided how to message this.

The other thing is that they don’t really have a big policy package here. It’s a weird thing. You can imagine a world where the Inflation Reduction Act was actually an Inflation Reduction Act. They just renamed something else, the Inflation Reduction Act. And the stuff that got cut out of it by the guy who helped, I think, rename it that, Joe Manchin, was all the stuff that actually might have brought prices down for people, all the stuff that focused on things like child care.

And so if you ask like, what is their big package? What is their headline policy on affordability? There are certain things they are touting that they’ve already done, like Medicare prescription drug pricing, which actually did bring down the price some people pay for some drugs, junk fees.

The insulin price cap, really, really important.

Really, really important. So they — it’s not an accident, I think, that the couple of policies they have that actually brought down the price of something for someone are very central to the reelection campaign. But I don’t think they have had a very clear set of, here are the big things we intend to do on that in term two. If you’re not happy with how things have turned out, you don’t just have to wait. What you need to do is give us the House again. This is the big project here. And here’s what I’m going to do to achieve it.

Absolutely. So it’s pretty hard for them to get prices down. You’re just going to have to have subdued inflation for a while for people to feel good in the grocery store again, feel good going out to target or wherever they’re shopping. There’s a lot of room to really improve the fundamentals of the economy for people by attacking the cost of living crisis.

Health care costs could go down quite a bit. It’s really hard. It’s really, really, really tough. But I think if you made an effort to get premiums and out-of-pocket costs down by instituting price controls, allowing the government to negotiate for prescription drugs, there’s a million different ideas for how to do this. That could be super powerful.

Getting rents down, increasing housing supply, that is going to have a lot of benefits for the economy. Again, it’s going to mean more construction, which is going to be inflationary. There’s tremendous space on child care. It’s really popular when states and cities do 3K and 4K, which a number of places have done now. If you had a comprehensive zero to five plan that had the government come in and basically say, you don’t have to start at five, we’re going to help you starting at six months, that would be great.

And they’ve already had a lot of traction with student loan debt. And I know that there are concerns about the distributional effects of that, but it is quite popular because I think people see the whole system as being screwed up.

Although, polling doesn’t do that well.

Yeah. I mean, it’s popular for the people who do it. And I think that it was polling that led them to do so much on student debt, right? And again, I think people’s perceptions of things are kind of wishy washy, but I think that that can advantage politicians. Whether you can pass any of that through congress, I don’t know. It’s really, really hard. A lot of what we’re talking about would be expensive, but there’s definitely space there.

How about Donald Trump? So I’ve watched some of his rallies around this. And he talks a lot about how expensive everything is, talks a lot about how much it all costs. I wouldn’t say, he’s got an articulated agenda that will bring price decreases, but to the extent you understand what the Donald Trump second term economic agenda is, is it inflationary? Is it deflationary? What are the big ticket items? How would you say he is saying he would handle this?

It’s pretty inflationary. So tariffs are inflationary. If you wanted to lower costs, you would just eliminate tariffs. But tariffs are a big part of his economic package. Immigration is not necessarily an issue that I think people think of economically, but in a world where we have more folks who have immigrated here, and wages are still going up, and you don’t have that sense of low wages being a function of people who got here and didn’t stand in line like they should have taking money away, I don’t know.

I think agricultural communities have also stressed the importance of immigrants to our agricultural workforce.

Mass deportation would be hugely price increasing.

Yes. We’ve had agricultural communities, we’ve had construction companies note that absent labor provided by immigrant workers, they wouldn’t be able to do what they’re doing. Costs would go up. And we would throttle production there. I don’t think it’s the most important thing, but this would be inflationary. The cost of food is going to go up a lot if you’re having tomatoes and berries dying on the vine in California because there’s nobody there to pick it. Disrupting those parts of the economy would be really, really damaging. And again, I think it’s important to note that that is, in my mind, less important than the emotional and moral cost of trying to do something like this.

I think, sometimes, the response you get from Republicans on this, or you did, at least a couple of years ago, is, well then, they’ll just pay American workers more.

Unemployment rate is below 4 percent? What workers are you going to get to do agricultural work? This is why we have so many folks from other countries doing agricultural work here to begin with.

Same thing with construction. Construction is really hard work and it takes a lot of skill. You’re not going to snap your fingers and have millions of Americans start doing roofing work in Florida and Texas in the sun.

Well, you just said about tariffs being inflation, I think, is important. And it struck me that Biden just unveiled a huge set of new anti-China tariffs. We’re not going to allow these cheaper Chinese electric vehicles in here. But his tariffs on a bunch of Chinese goods, which, on the one hand, I get the politics of, you want to take an issue away from Donald Trump. They do have genuine economic and national security concerns about rebuilding certain kinds of supply chains and manufacturing capacities in the U.S..

But at a time when you have a lot of focus on prices on the one hand and climate change on the other, jacking up the price on Chinese-made electric vehicles and solar panels and things like that, from a policy perspective, you are making things more expensive, which struck me as surprising at the moment.

I think that the issue here that I see is not even really exactly an economic one. It has to do with their own energy goals. If we are going to have a transition to green energy, it’s going to be tough to do that with policies like these.

In terms of increasing American manufacturing capacity, I think there’s now a widespread understanding that it’s good to make some things here, and that not making them here leaves us really, really vulnerable. So in terms of the supply of some critical drugs, we had some really bad issues with formula and formula importation. So I think that that is true. And again, manufacturing jobs have this nice spillover.

But with China, yeah, it’s tough. And I think that this is happening for national security reasons, perhaps, more so than economic reasons. And I think the real question there is about how that would fit in with a broader energy policy.

But isn’t there some way in which if people could start buying whatever these are, $15,000, $20,000 Chinese-made electric vehicles that are popular in the rest of the world here, they would experience that as nice, right? I mean, it would be nice to be able to get a good electric car for a lot less money than you can currently get an electric car.

I take some of the set of affordability crisis and price crisis problems as the revenge of neoliberalism. I mean, the neoliberal trade was you kept prices really low. I mean, neoliberalism in many ways is a dominant economic orthodoxy emerges out of the inflationary crisis of the ‘70s. And you keep prices low. And it turns out, that also kept wages pretty low, which is a real problem with it.

The Biden administration has been extremely clear that they are the end of neoliberalism. They are the Democratic administration making a turn on neoliberalism. It’s really the break between them and the Obama administration economically. And so what are you getting? You’re getting the other side of that bargain. You are getting higher wages, but you’re also getting significant higher prices.

And I mean, on one level, I just don’t think they figured out the politics of that. I don’t think they were prepared, not that their policies are the main thing that raised prices, but they definitely don’t have an economic story of like, why paying higher prices is a good thing in some of these areas?

And on things like the Chinese electric vehicles, I mean, I’m very uncomfortable with that policy. I understand the reasons you might want to have a domestic electric vehicle manufacturing chain. I agree with them, in many ways, but you can pull in Chinese manufacturing here. But if you want this E.V. transition to happen quickly and you don’t want people to hate you for it, you need really cheap electric vehicles. And China knows how to make them, and frankly, we don’t.

And you listen to Donald Trump at a rally, and he is going directly at this. He’s like, you’re going to hate these electric vehicles. They’re too expensive. He sees this as like a coming problem. And I don’t know, I think Democrats are about to get caught really flat footed here because on the one hand, they’re cranking up the regulations on electric vehicles, and on the other hand, here’s China willing to sell us a bunch of cheap ones. And we’re like, no, no, no, no, no. We’ll take the expensive ones.

And I’m not saying I don’t hear the rationale, I do, but they’re acting like there aren’t trade offs here. And I think the trade off is going to be politics. I don’t think the policy is going to be popular.

I would isolate cars for a second. And I would think about the neoliberal trade that you are describing, more in terms of domestic labor costs. So for a long time, the cost of fast food and Walmart stuff, part of the reason that prices were so low was that wages were so low. And now, we’ve seen this shift to more European style pricing, where the prices are up a little bit, but the wages are pretty good. And you can start to see families getting by with these jobs.

And I would note that the wages are still way too low for a lot of these jobs. I really worry about delivery drivers, folks who are doing Uber Eats and that kind of thing. But I think it is fundamentally a trade that would be better if big block prices were higher, but all of the wages were higher. And again, we’ve seen really significant wage growth in those jobs. And I think that that’s good. I think people might not like it fundamentally, but I think that that would be, overall, a good trade. On the electric vehicles issue, cars are expensive. People don’t buy them that often. The differential in cost between what we have here in the United States right now and between what China is producing is really, really significant. And so I would almost see it as its own little special issue. And I feel like I just don’t understand the foreign policy implications and the national security implications enough, because it seems to me, again, that those are somewhat predominant.

The reason I do connect these a bit is it feels to me like they reflect an unformed politics of prices, that the Democratic and Republican coalitions knew how to talk about the problems of demand, of jobs, of wages. They knew what their policies were. Republicans wanted to handle all this through tax cuts. Democrats want to do more stimulus. They want to do minimum wage increases, et cetera. And I think neither side is very clear on what they want to do about affordability. It’s harder. It splits your coalitions in weird ways. It has all these cross-cutting elements with other things, like the energy transition.

And the reason I think the Chinese tariffs and E.V. issue is tricky for the Democrats is that on the one hand, it shows the way some of their goals, like, don’t let manufacturing communities in the Midwest be hollowed out, don’t be too reliant on China, conflicts with other goals, which is like, you need to have something to say to people about how you’re going to get them cheap things again.

And Donald Trump and the Republicans are not better. It’s word salad. I think you see some governors who do, like Jared Polis in Colorado. You listen to that guy talk, it is just cost of living, cost of living, cost of living, cost of living. But I do think something you just really hear on both sides is that the economic problem they are facing and that is salient to the public has changed faster than they have changed. They’ve left a lot of this up to the Fed, frankly.

And in terms of really having a message on what we are going to do, and we are laser-focused on this, and we have 50 ideas for what to do here, you don’t hear that kind of talk. It’s not being treated as a kind of policy-amenable problem in the way that low demand was 15 years ago.

I think that you are going to see mean reversion on prices and consumer sentiment. I think that with inflation below 3 and 1/2 percent where it is right now, things will normalize. Supply chains have readjusted. Wage growth has come down to a level that I think is more normal. And so if I were a political consultant, I would worry about fighting the last war a little bit.

I’m not sure that you need to do too much on consumer prices, given that the supply chain disruptions and everything else has evened out. I think there’s tremendous space to do a lot on the cost of living crisis. And I think it would be pretty popular. And I think that you could focus on child care, health care, housing.

Right now, we really do not have a national housing policy. And in part, that’s because housing policy is mostly left to state and local governments. HUD is teeny tiny. It’s teeny tiny. And it hasn’t gotten bigger as we’ve had this housing crisis.

HUD being the Department of Housing and Urban Development.

Housing and Urban Development. They do very little housing and very little urban development. It’s almost exclusively the purview of state and local governments. But we’re really just starting to think about how the federal government could start increasing housing supply.

So I think that in the longer term, all of these things — these are still going to be problems for folks 5 years, 10 years from now. And I actually think that the fact that you’ve had this bending in the health care cost curve, there’s space for, yeah, let’s start getting drug prices down. Doctors and nurses, cover your ears. Let’s allow more of them in and allow more competition so that in the long term, you can have lower wages for them. It’s very, very, very unpopular, but that would probably be good. Let’s increase health care supply, but let’s just get the prices down for all of these things. Let’s rationalize this completely irrational system. Is that good on a bumper sticker? Does that win elections? I’m not sure about that, but it’s good policy.

I try to take your point about mean reversion, but I do think there’s a thing in politics. This is what people are worried about now. And they all have to run this year. And there’s something about being caught trying and being caught worrying.

You want people to feel like you were upset about the thing they are upset about. And if you’re the person in charge, you’re working really hard on the thing they’re upset about. I have this slightly strange view on the politics of Israel-Gaza, which is that I think the main way it is going to damage Joe Biden is not a revolt from the left on Gaza, but just a generalized sense among voters who actually don’t care about it that much. If you look at like a list of issues they think are important, like Israel and Gaza are extremely far down there, is that the feeling that Biden and the Democrats are paying all this attention to wars over there and not doing anything about the cost of groceries over here.

And to some degree, I think this is one of Trump’s stronger veins of political attack, which he’s leveraging a isolationism. We just shouldn’t be involved in Ukraine. If it were me, like Hamas would have never done this, and we wouldn’t be thinking about it. He doesn’t seem like he is interested. He’s arguing all these things are a distraction.

Now, he also doesn’t have a policy agenda, but I think that the way these things are hurting Biden is a perception that the focus is on these conflicts that most Americans just find to be like an unwinnable morass. And they’re not seeing the action and the progress on the thing that they’re really worried about.

So in surveys, when pollsters are asking voters what they care about the most, they say the economy. And I recognize that I said that you have to take people at their word. I think there’s some chance that the economy is not going to be the decisive issue here. I think Joe Biden and Donald Trump personally, what people personally think about them and how they see them personally campaigning is going to matter quite a bit.

In 2022, we saw Dobbs and we saw immigration as really important and motivating issues for partisans on both sides. And so I think you need a strong economic message. But I think that there’s this way in which we had some elections recently that were absolutely dominated by economic issues. But in 2016, that wasn’t an economic election. 2020, it wasn’t really an economic election exactly, it was very unusual because of where we were in Covid at that point. 2024, I’m not sure that this is an election where the economy is going to be the dominant issue.

And I think that what happens with gas prices and with price competition from retailers is going to matter a lot in terms of folks inflation perceptions and how they feel about their own capacity to spend. And so right now, I would say that those trends are going more positively. And we’ve seen some consumer sentiment numbers that have gone up, which is exactly what you would expect. But we have the summer travel period, and commodity prices are increasing in some cases. So I don’t know how long that will hold.

Then always our final question. What are three books you’d recommend to the audience?

I was trying to think about books about inflation and consumer prices that might be compelling for the audience.

That feels like a small category.

Yeah, it’s a little bit tough, right?

However, there’s a really great book that came out a few years ago called “Franchise: The Golden Arches in Black America” by Marcia Chatelain. And it’s about McDonald’s and franchising, specifically about the growth of McDonald’s and its role in Black communities and with Black consumers. It’s such a compelling book. It’s so wonderful. I learned so much from it.

I recently read the best political book that I’ve ever read, which is called “A Place Of Greater Safety.” It is a novelization of the French revolution. You’re smirking at me.

I’ve never been recommended a book as often in my own household as this book. [LAUGHS]

We were supposed to go out to see friends for drinks, and I was like, I cannot come out because we are in the critical year of 1790. And I need to know what’s happening. It’s like an 800-page historical novel by Hilary Mantel.

Price increases, price instability is a really important part of the French revolution. I didn’t know that much about the French revolution. I knew that it had happened. I knew that you have the French Republic. I knew that you execute a king and a queen, and eventually, you have this dramatic political transformation. It is so unbelievably good and so compelling.

And then I was thinking about, of the best books about the neoliberal economic deal that we make for a really long time in America that I think that we are just starting to upset and grow past, the best book I think about it, and it’s a classic, is “Nickel and Dimed” by Barbara Ehrenreich, which is a book about women in the workforce. It’s about low wages. It’s about tipping. It’s about a million things and it’s just fantastic.

Annie Lowrey, thank you very much.

Thank you. [MUSIC PLAYING]

This episode of “The Ezra Klein Show” is produced by Rollin Hu. Fact checking by Michelle Harris with Mary Marge Locker and Kate Sinclair. Our senior engineer is Jeff Geld, with additional mixing by Aman Sahota. Our senior editor is Claire Gordon.

The show’s production team also includes Annie Galvin, Elias Isquith and Kristin Lin. Original music by Isaac Jones and Aman Sahota. Audience strategy by Kristina Samulewski and Shannon Busta. The executive producer of New York Times Opinion Audio is Annie-Rose Strasser. And special thanks to Sonia Herrero.

All right. We did it. We solved the economy.

Produced by ‘The Ezra Klein Show’

There’s something weird happening with the economy. On a personal level, most Americans say they’re doing pretty well right now. And according to the data, that’s true. Wages have gone up faster than inflation. Unemployment is low, the stock market is generally up so far this year, and people are buying more stuff.

And yet in surveys, people keep saying the economy is bad. A recent Harris poll for The Guardian found that around half of Americans think the S. & P. 500 is down this year, and that unemployment is at a 50-year high. Fifty-six percent think we’re in a recession.

There are many theories about why this gap exists. Maybe political polarization is warping how people see the economy or it’s a failure of President Biden’s messaging, or there’s just something uniquely painful about inflation. And while there’s truth in all of these, it felt like a piece of the story was missing.

[You can listen to this episode of “The Ezra Klein Show” on the NYT Audio app , Apple , Spotify , Amazon Music , YouTube or wherever you get your podcasts .]

And for me, that missing piece was an article I read right before the pandemic. An Atlantic story from February 2020 called “ The Great Affordability Crisis Breaking America .” It described how some of Americans’ biggest-ticket expenses — housing, health care, higher education and child care — which were already pricey, had been getting steadily pricier for decades.

At the time, prices weren’t the big topic in the economy; the focus was more on jobs and wages. So it was easier for this trend to slip notice, like a frog boiling in water, quietly, putting more and more strain on American budgets. But today, after years of high inflation, prices are the biggest topic in the economy. And I think that explains the anger people feel: They’re noticing the price of things all the time, and getting hammered with the reality of how expensive these things have become.

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Consumer Behavior and Culture Essay

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
• As a template for you assignment

Failures and successes of any business enterprise depend on the behavior of its consumers. The behavior of the end-user consumer affects both the producer of final goods as well as the intermediaries who distribute the products from the point of production to the point of consumption.

Understanding consumer behavior can play a great role in a business enterprise as it helps identifying its weak points and reflect on the positive aspects which can enable it to win the confidence of the consumers (Sinha, 2012). The consumer behavior and the purchasing decision are closely related. Information about consumer product usage therefore enables organizations to come up with effective ways of designing their products (Turner, 2012).

The amount and types of goods that producers produce depend on the level of consumption of the consumers. The trends in consumer behavior have also been known to reflect the performance of the national economy. When the level of consumption is high, businesses tend to increase in size and profitability (Perner, 2010). An economy that has well performing businesses is able to realize significant growth. Therefore, with a high level of consumption in the economy, the level of economic growth is also high and vice versa.

In order for business enterprises to increase their profitability, they need to develop a strategy that can enable them to market their products to consumers effectively. Most organizations devise marketing strategies whose goal is to enable them understand the consumption trends in the areas where they operate. In order to succeed in this process, businesses need to employ a team of marketers who would focus on learning about the consumption behavior of consumers in different markets (Turner, 2012).

When marketers gain a better understanding of consumers in a particular region, they are able to give relevant market information to their organizations. Organizations are therefore able to make adjustments to the products that they produce thereby making them more appealing to the consumers.

Understanding consumer behavior entails knowing what the real wants of consumers are. This way, a business enterprise can be able to design a product that meets the exact needs of its consumers (Reference for Business, 2012).

Therefore, it is the responsibility of all marketers to ensure that they take time to understand the consumption behavior of consumers so that they can manage to come up with the appropriate marketing strategies that would assist in capturing the attention of the consumers. This way, they would be able to win a large number of consumers thereby increasing the profitability of their organization.

Marketers need to understand that the purchases consumers make are meant to address a number of problems that face them. Whenever a customer consumes a product that addresses his basic needs, he is said to be driven by necessity. Therefore marketers should analyze the behavior of such a consumer based on his needs.

However, there is a different group of consumers who purchase goods based on the attractiveness of the products. It is therefore true that different groups of consumers have varying needs and wants (Delbert, Roger, & Kenneth, 2002).

Based on the different motives for which consumers demand for goods and services, it is the responsibility of marketers to ensure that they understand the unique attributes that consumers look for in the products that they purchase.

They should therefore ensure that their organizations incorporate the attributes that they observe from the customers in order to make the products more appealing to the customers thus increasing the number of sales of the products (Lamb, Hair, & McDaniel, 2011).

There are certain products that make it difficult for customers to choose between alternatives because of similarity in the features of them (Sinha, 2012). In this case, it becomes difficult for marketers to sell products to customers since they are not aware of the exact product features that are appealing to the customers.

Sellers often find it difficult to sell their products to customers because they focus a lot of attention on the products that they desire to sell. It is therefore difficult for many business owners to fully understand the reasons why certain customers remain inclined to specific products that are offered by other business enterprises.

This issue brings in the need for businesses to hire marketers who would concentrate on identifying the reasons why consumers remain inclined to certain product types (Turner, 2012). The marketers are able to carry out an in depth analysis of the various types of consumer behaviors.

The marketers are also able to give the producer of a particular product the types of features that customers look for in a product. The producer can therefore change the manner in which he produces his products and instead introduce new features which seem to be more appealing to the customers. This makes the sales revenue of the business enterprise to go up (Reference for Business, 2012).

However, this would not be possible if a business enterprise does not take time to study the behavior of its customers. The marketers of any type of business can therefore be said to have a very significant impact in terms of influencing the consumption pattern of consumers (Lamb, Hair, & McDaniel, 2011). In the case of the businesses that do not take time to study the consumption behavior of their customers, their sales revenue either remain constant or decrease because of the increased competitiveness in the business environment.

The consumption pattern of consumers keeps changing once in a while based on the lifestyle that people adopt. For example, the consumption pattern today is not the same as the consumption pattern that existed in the early 1990s. As technology advances and people’s lifestyles change, the consumption behavior also changes.

As a result, marketers should ensure that they keep abreast with the consumption patterns of the consumers so that their marketing strategies can remain relevant to the consumers. This way, they would be able to implement marketing strategies that would influence the consumption patterns of consumers thereby ensuring that the organizations continue receiving a significant number of consumers.

This would have the net effect of increasing an organizations profit margin (Delbert, Roger, & Kenneth, 2002). By understanding the consumption pattern of consumers, the marketers would be able to implement future marketing strategies that would enable them to remain relevant in the eyes of the consumers. The marketers should therefore be able to come up with effective promotional offers and marketing tactics which would ensure that their organization continues to experience significant growth.

In the world today, organizations are introducing new products to enable them cope with the competitive pressure in the business environment. As a result, marketers are being faced with the problem of deciding whether they should introduce new products in the market or whether they should keep up with their current products.

When organizations realize that there is an increase in the competitive pressure because of the introduction of new products in the market, they start carrying out market surveys aimed at determining whether the introduction of a new product would be effective in raising their profit margins (Sinha, 2012).

Marketers therefore carry out a study of the consumer’s buying behavior in order know whether the introduction of a new product would be welcome by the consumers. Therefore, when marketers carry out a study of consumers’ behaviors, they are able to determine whether the introduction of a new product would be effective in meeting the needs of the consumers.

Therefore, if consumers are observed to make purchases of a particular product regularly, marketers get to understand the consumption habits of the consumers. Once consumers demonstrate that they have an interest in a particular product, it is time for the marketers to introduce a new product in the market (Agadoni, 2012).

A company may lose its reputation as a result of engaging in the production of goods that are unfriendly to the customers. In order for such an organization to earn a good reputation, it should hire marketers whose goal would be to ensure that they conduct a study of the products that seem to be more appealing to the consumers.

The producing firm can therefore manage to come up with a strategy that would enable it to produce products which would meet the needs of consumers adequately (Agadoni, 2012). The company can therefore be able to provide quality goods to its customers thereby enabling it to be in line with its mission statement.

In any country, there exist people who come from different cultures. There are people who consume certain products whereas it is a taboo for other communities to consume the same products. It is therefore the responsibility of a business enterprise to ensure that the goods being marketed to a particular society are acceptable.

Therefore, before marketing any products in any society, it is important for marketers to ensure that they fully understand the product preferences of the members of that particular community (Blythe, 2008). After a critical study of the consumers, the marketers would be able to understand the type of products to offer to the society in order to ensure that they increase their customer base significantly.

Therefore, it is true that marketers are capable of providing a business enterprise with an understanding of the types of products that should be offered to certain communities (Lamb, Hair, & McDaniel, 2011). This way, the level of demand would be high in such communities thereby increasing the overall profitability of the business enterprise.

Products that can meet the needs of consumers effectively are very important. In this perspective, it is true that most consumers demand for goods and services in order for them to survive. Other reasons why consumers demand for goods and services include prestige, security, or love.

For example, the promotion of women’s perfumes implies that women are likely to receive love if they use the perfumes. This is the same case with the advertisement of men’s cologne. In addition, prestige products are treated as very important by marketers. Marketers convince consumers that the products are important by giving the products bold advertisements (Blythe, 2008). Most prestige products are charged high prices.

Therefore, when luxury products are sold at expensive prices, the consumers give them more significance by assuming that they are of high quality. Marketers therefore need to ensure that they are proficient in marketing tactics and in analyzing consumer behavior in order to know which products they should offer at expensive prices and which products they should sell at cheaper prices

It is important for marketers to understand consumer’s psychology in order to know why they buy certain products. There are instances when marketers need to know the reasons why consumers purchase certain products. This is in order for them to know whether they can be able to influence the buying pattern of consumers (De-Mooij, 2010).

When marketers engage in the study of consumer behavior, they get to understand that there are those people who buy products out of the influence of other people while there are people who buy products in order to satisfy themselves.

For example, a shoe company that wishes to successfully market its products to consumers who wish to satisfy their own needs would mostly advertise about the comfort that the shoes would offer the customer. However, in the case where a company wishes to market its products to those people whose buying decisions are influenced by the decisions of others, the company can tell the consumers about how good they would look by wearing the shoes (De-Mooij, 2010).

The shoes should therefore be displayed differently in stores so that the different types of consumers can be able to easily identify the shoes that meet their needs adequately. In addition, since the green movement is gaining momentum, the marketing strategies that organizations adopt will have to reflect more on environmentally friendly lifestyles in order to influence the purchasing decisions of consumers.

Reference List

Agadoni, L., 2012, Why Do Marketers Need to Know Consumer Needs? Web.

Blythe, J., 2008, Consumer Behaviour, Cengage Learning, New York.

Delbert, H, Roger, B & Kenneth, C., 2002, Consumer Behavior: Building Marketing Strategy, McGraw-Hill, New York.

De-Mooij, M., 2010, Consumer Behavior and Culture: Consequences for Global Marketing and Advertising, SAGE, New York.

Lamb, C. W., Hair, J. F., & McDaniel, C. (2011). Essentials of Marketing. New York: Cengage Learning.

Perner, L., 2010, Consumer Behavior: The Psychology of Marketing . Web.

Reference for Business, 2012, Consumer Behavior . Web.

Sinha, J., 2012, Understanding Consumer Behaviour in Markets . Web.

Turner, J., 2012, Why the Second Purchase is the Most Important Purchase You Get from a Customer . Web.

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• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2019, April 3). Consumer Behavior and Culture. https://ivypanda.com/essays/consumer-behavior-and-culture/

"Consumer Behavior and Culture." IvyPanda , 3 Apr. 2019, ivypanda.com/essays/consumer-behavior-and-culture/.

IvyPanda . (2019) 'Consumer Behavior and Culture'. 3 April.

IvyPanda . 2019. "Consumer Behavior and Culture." April 3, 2019. https://ivypanda.com/essays/consumer-behavior-and-culture/.

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IvyPanda . "Consumer Behavior and Culture." April 3, 2019. https://ivypanda.com/essays/consumer-behavior-and-culture/.

A whack-a-mole approach to big tech won’t do, says Europe’s antitrust chief

Margrethe vestager insists that openness need not come at the expense of security .

A S DIGITISATION HAS progressed, we have seen power become increasingly concentrated in the hands of a small number of companies, much like the period that spawned the first antitrust laws in the late 19th century. Digital markets are particularly susceptible to concentration.

We have seen a lot. One example is digital giants pushing their own services on the platforms they control, while making it difficult for consumers to find rival services. Years of experience in antitrust enforcement showed us that this held back innovation and growth of new business models, to the detriment of citizens and society as a whole.

Governments and regulators worldwide are grappling with these issues. In America, the Department of Justice recently launched a case challenging Apple’s monopolisation of smartphone markets. That case follows similar action against Google, with the Federal Trade Commission also filing complaints against Meta and Amazon.

Yet, based on our own experience in Europe of cases against Google, Apple and Amazon, long investigations and heavy penalties alone have not addressed the structural entrenchment of companies holding market power. Europe could have continued to pursue a case-by-case antitrust approach, but this would have carried the risk of playing a never-ending game of whack-a-mole. That is why we decided to complement case-by-case enforcement with “ex-ante” regulation that helps to address upfront the systemic anti-competitive behaviour which is often replicated from one case to another.

This is how the EU ’s Digital Markets Act ( DMA ) was born, with its list of Dos and Don’ts, and with contestability and fairness at its heart. The DMA requires designated online marketplaces to share data they collect with the small retailers they host. It also requires large platforms to adjust their search algorithms to give rival offers the same prominence as their own. Digital ecosystems must be made interoperable to open opportunities for competitors, while enabling all players to reap economies of scale. European users must have a choice of where and how they download their apps.

Some critics seem to think that we are asking the impossible of the big tech platforms. We are not—because being successful, yet leaving space for others to compete, is not a contradiction.

The critics seem to imply that digital business models can only flourish when they are not challenged by competitors. We work hard to ensure that business success is fuelled by positive and economically viable drivers—like smart investments, talent, research and development—and that innovation is rewarded and consumer choice respected. This is at the core of the European model. We have built our societies on the premise that prosperity is driven by open, vigorous competition. Ten years of competition enforcement has taught me that if we want Europe to remain a global economic leader, we must never give up on competition.

One of the first examples of gatekeeping in digital markets I encountered as EU competition commissioner was the antitrust case against Amazon’s e-books distribution agreements, in 2017. As a result of that case, Amazon agreed to rebalance its relationship with the publishers that it hosted, paving the way for more competition with rival e-book platforms.

Competition enforcement provides plenty of similar examples that show it is not only possible but essential to enforce competition rules in such cases. It is the only way to ensure that consumers and businesses get the best outcome in terms of prices, choice, quality and innovation.

The DMA makes the market contestable and open again. We expected some resistance to this change, and we have seen it, as recently opened investigations into suspected non-compliance with the DMA show. Even so, we are already seeing changes in behaviour that benefit consumers and businesses. Apple, for example, has opened its ecosystems in Europe to allow competitors to set up new app stores on i OS . And end-users can now easily choose the default web browser that best meets their needs.

And these are just some benefits; more will come as gatekeepers adjust their business models, and businesses and consumers take full advantage of them. These benefits are catalysing change globally, with the DMA serving as an inspiration for competition regimes outside the EU, such as in Japan and South Korea.

Some argue that opening up involves trade-offs. It does not have to. Asking platforms to open up their ecosystem, for instance, does not mean they have to compromise the security of their service. Technology can deliver an open and safe digital environment, if there is the will and sufficient investment to make that happen. Compliance with the DMA can be achieved without undermining users’ rights to safety and privacy.

Europe’s chosen combination of case-by-case enforcement and ex-ante regulation will promote open, competitive markets. But this is not only about the economy. It is also about society and the trust that keeps it together. Creating a framework for fair and contestable markets not only empowers citizens and creates more opportunities for businesses, but in doing so also builds and preserves trust in democracy.  ■

Margrethe Vestager is the European Commission’s Executive Vice-President for a Europe Fit for the Digital Age and the EU Commissioner for Competition.

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