A reappraisal of Katona’s adaptive theory of consumer behaviour using U.K. data

Robert Gausden*, Mohammad S. Hasan

*Corresponding author for this work

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Abstract

The objective of this paper is to conduct a reappraisal of Katona’s (1968) adaptive theory of consumer behaviour, which maintains that discretionary consumption is partly determined by attitudes and expectations of households. Initially, using UK data, we follow Katona by empirically examining whether changes in personal expenditure on durable goods are connected to earlier movements in consumer confidence. Evidence of a lack of a stable relationship between these two variables encourages us to perform a disaggregated analysis involving 111 components of four different forms of consumption, which enables construction of an aggregate measure of discretionary spending. We find that sufficient criteria are satisfied for the sentiment index to be accepted as a reliable predictor of the growth of gratuitous expenditure. In conclusion, then, it would seem that the validity of Katona’s theory can be revived if we are prepared to discard the assumption that durable goods’ consumption is synonymous with discretionary spending.
Original languageEnglish
Pages (from-to)122-143
Number of pages22
JournalThe Manchester School
Volume90
Issue number2
Early online date14 Jan 2022
DOIs
Publication statusPublished - 1 Mar 2022

Keywords

  • Katona's adaptive theory
  • consumer confidence
  • household consumption
  • durable goods
  • discretionary expenditure

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