Demand Side Or Consumer Behavior
THE DEMAND SIDE OR CONSUMER BEHAVIOR
Islamic perspective
by
MONZER KAHF
CONTENTS
INTRODUCTION
1
SECTION ONE: EXOGENOUS AND ENDOGENOUS FACTORS
IN CONSUMER BEHAVIOUR
3
Exogenous Factors:
3
I.
Effect of wealth and income
II.
Effect of technology
6
III.
Effect of biological and material surroundings
7
Effect of the amount, nature and cost of information
8
IV.
4
V.
Effect of tastes and desires
8
VI.
Effect of beliefs, religion, culture and legal and political framework
9
Endigenous Factors:
SECTION TWO: ISLAMIC RATIONALIM
12
13
I-
The Concept of Success
16
II-
Selfishness and Altruism
18
III-
Time Horizon of Consumer Behaviour
20
IV-
The Concept of Wealth
22
V-
The Concept of Goods
24
VI-
Ethics of Consumption in Islam
26
SECTION THREE: TOOLS OF ANALYSIS
28
SECTION FOUR: CONSUMER EQUILIBRIUM
32
END NOTES
42
INTRODUCTION
In another paper, we studied the market interaction between consumers and producers in the Islamic perspective. In order to understand that interaction, we should know more about the respective behaviors of these two economic agents. This we will do in this and a forthcoming paper, God will.
The theory of consumer behavior centers on the income earner's way of utilizing his/her income. Let us assume that at a certain moment of time output has all been produced and persons who provided the factors of production have gotten their shares of that output. These shares are the incomes of these persons, the consumers. The consumers may use income for buying consumption goods and services, saving or giving away in the form of charity for the sake of Allah.
It is rather very simple and intuitive to imagine consumers entering the market with certain preparatory and tentative ideas about what goods they want to buy and in what quantities. In the market they will be faced with certain conditions regarding availability of items they want, the prices offered by different producers, credit conditions, etc. This new
Islamic perspective
by
MONZER KAHF
CONTENTS
INTRODUCTION
1
SECTION ONE: EXOGENOUS AND ENDOGENOUS FACTORS
IN CONSUMER BEHAVIOUR
3
Exogenous Factors:
3
I.
Effect of wealth and income
II.
Effect of technology
6
III.
Effect of biological and material surroundings
7
Effect of the amount, nature and cost of information
8
IV.
4
V.
Effect of tastes and desires
8
VI.
Effect of beliefs, religion, culture and legal and political framework
9
Endigenous Factors:
SECTION TWO: ISLAMIC RATIONALIM
12
13
I-
The Concept of Success
16
II-
Selfishness and Altruism
18
III-
Time Horizon of Consumer Behaviour
20
IV-
The Concept of Wealth
22
V-
The Concept of Goods
24
VI-
Ethics of Consumption in Islam
26
SECTION THREE: TOOLS OF ANALYSIS
28
SECTION FOUR: CONSUMER EQUILIBRIUM
32
END NOTES
42
INTRODUCTION
In another paper, we studied the market interaction between consumers and producers in the Islamic perspective. In order to understand that interaction, we should know more about the respective behaviors of these two economic agents. This we will do in this and a forthcoming paper, God will.
The theory of consumer behavior centers on the income earner's way of utilizing his/her income. Let us assume that at a certain moment of time output has all been produced and persons who provided the factors of production have gotten their shares of that output. These shares are the incomes of these persons, the consumers. The consumers may use income for buying consumption goods and services, saving or giving away in the form of charity for the sake of Allah.
It is rather very simple and intuitive to imagine consumers entering the market with certain preparatory and tentative ideas about what goods they want to buy and in what quantities. In the market they will be faced with certain conditions regarding availability of items they want, the prices offered by different producers, credit conditions, etc. This new