Willingness to consume and ability to consume
AbstractGeorge Katona (1960) introduced the distinction between ability to buy and willingness to buy. Ability to buy refers to the objective factors determining actual purchases whereas willingness to buy captures subjective factors such as attitudes or moods. I show that Katona's theory can be reconciled easily with standard models of intertemporal utility maximization if one allows for a time-varying preference parameter that is exogenous to the consumer and determined by the social environment. Such a willingness-to-consume model is tested against standard alternatives using data from seven European countries. The empirical evidence rejects the permanent income hypothesis and supports the willingness-to-consume model.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Behavior & Organization.
Volume (Year): 66 (2008)
Issue (Month): 2 (May)
Contact details of provider:
Web page: http://www.elsevier.com/locate/jebo
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rabin, Mathew, 2002.
"A Perspective on Psychology and Economics,"
Department of Economics, Working Paper Series
qt4z78n1r9, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Rabin, Matthew, 2002. "A Perspective on Psychology and Economics," Department of Economics, Working Paper Series qt2wr3z049, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Matthew Rabin, 2003. "A Perspective on Psychology and Economics," General Economics and Teaching 0303003, EconWPA.
- Carroll, Christopher D & Fuhrer, Jeffrey C & Wilcox, David W, 1994.
"Does Consumer Sentiment Forecast Household Spending? If So, Why?,"
American Economic Review,
American Economic Association, vol. 84(5), pages 1397-1408, December.
- Christopher D. Carroll & Jeffery C. Fuhrer & David W. Wilcox, 1994. "RATS code for Does Consumer Sentiment Forecast Household Spending? If So, Why?," QM&RBC Codes 49, Quantitative Macroeconomics & Real Business Cycles.
- Palacios-Huerta, Ignacio & Santos, Tano J., 2004.
"A theory of markets, institutions, and endogenous preferences,"
Journal of Public Economics,
Elsevier, vol. 88(3-4), pages 601-627, March.
- Ignacio Palacios-Huerta & Jesus J. Santos, 2001. "A Theory of Markets, Institutions and Endogenous Preferences," Working Papers 2001-18, Brown University, Department of Economics.
- Christopher D. Carroll, 2001.
"A Theory of the Consumption Function, with and without Liquidity Constraints,"
Journal of Economic Perspectives,
American Economic Association, vol. 15(3), pages 23-45, Summer.
- Christopher D. Carroll, 2001. "A Theory of the Consumption Function, With and Without Liquidity Constraints (Expanded Version)," NBER Working Papers 8387, National Bureau of Economic Research, Inc.
- Christopher D. Carroll, 2001. "Codes for A Theory of the Consumption Function, With and Without Liquidity Constraints," QM&RBC Codes 37, Quantitative Macroeconomics & Real Business Cycles.
- Jeffrey C. Fuhrer, 1986.
"On the information content of consumer survey expectations,"
Special Studies Papers
204, Board of Governors of the Federal Reserve System (U.S.).
- Fuhrer, Jeffrey C, 1988. "On the Information Content of Consumer Survey Expectations," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 140-44, February.
- Atsuo Utaka, 2003. "Confidence and the real economy - the Japanese case," Applied Economics, Taylor & Francis Journals, vol. 35(3), pages 337-342.
- Earl, Peter E, 1990.
"Economics and Psychology: A Survey,"
Royal Economic Society, vol. 100(402), pages 718-55, September.
- Armin Falk & Markus Knell, 2004.
"Choosing the Joneses: Endogenous Goals and Reference Standards,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 106(3), pages 417-435, October.
- Falk, Armin & Knell, Markus, 2004. "Choosing the Joneses: Endogenous Goals and Reference Standards," IZA Discussion Papers 1152, Institute for the Study of Labor (IZA).
- Falk, Armin & Knell, Markus, 2004. "Choosing the Joneses: Endogenous Goals and Reference Standards," CEPR Discussion Papers 4459, C.E.P.R. Discussion Papers.
- Jappelli, Tullio & Pistaferri, Luigi, 2000.
"Using subjective income expectations to test for excess sensitivity of consumption to predicted income growth,"
European Economic Review,
Elsevier, vol. 44(2), pages 337-358, February.
- Jappelli, Tullio & Pistaferri, Luigi, 1997. "Using Subjective Income Expectations to Test for Excess Sensitivity of Consumption to Predicted Income Growth," CEPR Discussion Papers 1617, C.E.P.R. Discussion Papers.
- Luigi Pistaferri & Tullio Jappelli, 1998. "Using Subjective Income Expectations to Test for Excess Sensitivity of Consumption to Predicted Income Growth," CSEF Working Papers 12, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Kumar, V. & Leone, Robert P. & Gaskins, John N., 1995. "Aggregate and disaggregate sector forecasting using consumer confidence measures," International Journal of Forecasting, Elsevier, vol. 11(3), pages 361-377, September.
- Matthew Rabin., 1997.
"Psychology and Economics,"
Economics Working Papers
97-251, University of California at Berkeley.
- E. Philip Howrey, 2001. "The Predictive Power of the Index of Consumer Sentiment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(1), pages 175-216.
- John G. Matsusaka & Argia M. Sbordone, 1993.
"Consumer confidence and economic fluctuations,"
Working Paper Series, Macroeconomic Issues
93-13, Federal Reserve Bank of Chicago.
- Kjell Arne Brekke & Richard B. Howarth, 2000. "The Social Contingency of Wants," Land Economics, University of Wisconsin Press, vol. 76(4), pages 493-503.
- Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-87, December.
- Muellbauer, John, 1997. "The Assessment: Business Cycles," Oxford Review of Economic Policy, Oxford University Press, vol. 13(3), pages 1-18, Autumn.
- Bruno, Giancarlo, 2012. "Consumer confidence and consumption forecast: a non-parametric approach," MPRA Paper 41312, University Library of Munich, Germany.
- Michael W. M. Roos, 2009. "Die deutsche Fiskalpolitik während der Wirtschaftskrise 2008/2009," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(4), pages 389-412, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.