Consumer Perceptions of Commodity Characteristics: Implications for Choice and Well-Being

Posted: 29 Jan 2001

See all articles by Martin Currie

Martin Currie

Victoria University of Manchester

Ian Steedman

Manchester Metropolitan University - Department of Economics

Abstract

Consumers base market choices on beliefs about the properties of commodities. Invoking Lancaster?s characteristics approach, we explore the implications for consumer well-being of such beliefs being incorrect. Following an examination of the welfare cost of inaccurate beliefs, we address the question: do more accurate beliefs necessarily result in greater well-being? The impacts of changes in prices and income on well-being are then explored and some implications are drawn for the use of compensating variation. Finally, we contrast alternative perspectives on what constitutes the appropriate measurement of welfare where consumers? beliefs about what they are actually consuming are mistaken.

Suggested Citation

Currie, Martin and Steedman, Ian, Consumer Perceptions of Commodity Characteristics: Implications for Choice and Well-Being. Available at SSRN: https://ssrn.com/abstract=242538

Martin Currie (Contact Author)

Victoria University of Manchester ( email )

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Manchester, M13 9PL
United Kingdom
0161 275 4826 (Phone)

Ian Steedman

Manchester Metropolitan University - Department of Economics ( email )

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Cavendish Street
Manchester, M15 6BG
United Kingdom

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