Moderation and consumer behaviour

The chapter supplements the theory of consumer behaviour in conventional economics with insights from the primary sources of Islam. Every consumer tries to maximise utility within four dimensions: moderation, extravagance, waste, and niggardliness. These dimensions take different meanings in each social stratum. A complicating factor is the context of consumption which could be individual, social, or public. For each social stratum and for each context, these dimensions have different meanings. The chapter uses the methodology of behavioural economics for defining the dimensions of consumption. It elaborates the concept of marginal propensity to consume into four propensities: marginal propensities to moderation, extravagance, waste, and niggardliness. That necessitates re-defining the law of demand of conventional economics. We have derived four curves for the law of demand instead of the one familiar curve used in conventional economics. The last part relates the consumer behaviour with material well-being and happiness and concludes that moderation in consumption leads to the highest levels of happiness as compared to other dimensions of consumer behaviour.