Tuesday , April 8 2025
Home / Real-World Economics Review / Consumer Theory

Consumer Theory

Summary:
From Asad Zaman Lecture 5 of Advanced Microeconomics at PIDE. The base for this lecture Hill & Myatt Anti-Textbook Chapter 4 on Consumer Theory. Hill and Myatt cover three criticisms of conventional microeconomic consumer theory. Economic theory considers preference formation as exogenous. If the production process also creates preferences via advertising, this is not legitimate. Consumers are supposed to make informed choices leading to increase welfare. However, deceptive advertising often leads consumers to make choices harmful to themselves. The full information condition assumed by Economics is not valid. Economic theory is based on methodological individualism, and treats all individual separately. However, many of our preferences are defined within a social context, which cannot

Topics:
Asad Zaman considers the following as important:

This could be interesting, too:

Stavros Mavroudeas writes CfP of Marxist Macroeconomic Modelling workgroup – 18th WAPE Forum, Istanbul August 6-8, 2025

Lars Pålsson Syll writes The pretence-of-knowledge syndrome

Dean Baker writes Crypto and Donald Trump’s strategic baseball card reserve

Lars Pålsson Syll writes How economists forgot the real world

from Asad Zaman

Lecture 5 of Advanced Microeconomics at PIDE. The base for this lecture Hill & Myatt Anti-Textbook Chapter 4 on Consumer Theory.

Hill and Myatt cover three criticisms of conventional microeconomic consumer theory.

  1. Economic theory considers preference formation as exogenous. If the production process also creates preferences via advertising, this is not legitimate.
  2. Consumers are supposed to make informed choices leading to increase welfare. However, deceptive advertising often leads consumers to make choices harmful to themselves. The full information condition assumed by Economics is not valid.
  3. Economic theory is based on methodological individualism, and treats all individual separately. However, many of our preferences are defined within a social context, which cannot be neglected.

Before discussing modern consumer theory, it is useful to provide some context and

1      Historical Background:

In a deeply insightful remark, Karl Marx said that Capitalism works not just by enslaving laborers to produce wealth for capitalists, but by making them believe in the necessity and justness of their own enslavement. The physical and observable chains tying the exploited are supplemented by the invisible chains of theories which are designed to sustain and justify existing relationships of power. Modern economic consumer theory is an excellent illustration of these remarks.  read more

Asad Zaman
Physician executive. All opinions are my personal. It is okay for me to be confused as I’m learning every day. Judge me and be confused as well.

Leave a Reply

Your email address will not be published. Required fields are marked *