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The effect of income growth on the mix of purchases between disposable goods and reusable goods
Author(s) -
McCollough John
Publication year - 2007
Publication title -
international journal of consumer studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.775
H-Index - 71
eISSN - 1470-6431
pISSN - 1470-6423
DOI - 10.1111/j.1470-6431.2006.00504.x
Subject(s) - dispose pattern , speciality goods , commerce , business , fast moving consumer goods , veblen good , final good , intermediate good , finished good , goods and services , durable good , economics , product market , production (economics) , market economy , microeconomics , engineering , incentive , waste management
With each passing year consumers find more and more disposable goods for sale in the market place. Even goods that were considered to be reusable goods just a few years back are now disposable goods. As a result the American economy has been labelled a ‘throwaway society’. This paper examines a main underlying cause for this trend by linking growth in consumer income with the purchases of disposable goods. More specifically, the model proposes that as incomes rise, consumers will purchase more of both reusable goods and disposable goods. However, as incomes rise, consumers will naturally substitute purchases away from reusable goods and into disposable goods. The shift towards disposable goods occurs because it becomes too costly for consumers to spend their time repairing and maintaining products. Their time is better spent in more productive endeavours. It is simply cheaper (in terms of opportunity cost of time) to dispose of old products and replace them with new products.