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Understanding Consumption: What Interviews with Retired Households Can Reveal about Budgetary Decisions

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  • Edmund Chattoe
  • Nigel Gilbert

Abstract

This paper uses interview data from retired households to inform a discussion about economic models of consumption. It is divided into two parts. In the first part, the economic models are described. The paper then discusses several different types of reasons for finding them unhelpful in explaining consumption. The second part of the paper considers the role of ‘middle range’ theories in developing plausible models of household behaviour. Phenomena which the interviews suggest are important in explaining consumption, such as time allocation, the labour supply decision, the ubiquitous durability of goods and the structure of the household, are not typically supported by middle range theory in current models. Without the constraints of such theory, it is very hard to distinguish models providing genuine explanation from those that merely fit the data. The latter part of the paper also discusses aspects of a new middle range theory of consumption suggested by the interviews.

Suggested Citation

  • Edmund Chattoe & Nigel Gilbert, 2001. "Understanding Consumption: What Interviews with Retired Households Can Reveal about Budgetary Decisions," Sociological Research Online, , vol. 6(3), pages 1-12, November.
    • Handle: RePEc:sae:socres:v:6:y:2001:i:3:p:1-12
    DOI: 10.5153/sro.627
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    References listed on IDEAS

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    4. Flavin, Marjorie A, 1981. "The Adjustment of Consumption to Changing Expectations about Future Income," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 974-1009, October.
    5. Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1.
    6. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
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    8. Fumio Hayashi, 1985. "The Permanent Income Hypothesis and Consumption Durability: Analysis Based on Japanese Panel Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(4), pages 1083-1113.
    9. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244.
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    Cited by:

    1. Edmund Chattoe-Brown, 2013. "Why Sociology Should Use Agent Based Modelling," Sociological Research Online, , vol. 18(3), pages 31-41, August.

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