Demographic Variation: Its Impact on Consumer Behavior
Papers by Fisher I and Lydall 2 are illustrative of recent efforts by economists to determine how demographic variation affects consumer behavior. It is obvious that such population characteristics as age, family size, and educational levels do change over time. If these demographic changes do affect consumer behavior, much quantitative economic research will have to be modified. Whether it will be necessary to incorporate demographic variables in a model of consumer behavior will depend on the purpose for which the model has been constructed. Estimation of unbiased behavioral parameters for economic variables will require that demographic variables be included in the model if their movements have been correlated with price and income changes employed in the estimation procedure. When the objective is one of forecasting, demographic variables will not have to be included in the model if their movements are correlated with price and income variables. Here one must distinguish between short-run and longerrun forecasts. In the short run, price and income movements will probably be independent of movements in demographic variables. Finally, it is clear that if the purpose is a better understanding of consumer behavior, demographic variables should be included in the model regardless of whether or not movements in these variables are correlated with changes in prlces and income. The research reported in this paper tested whether the hypothesis that price and income elasticities vary with demographic variation is consistent with an available set of data. Weekly observations on the meat, fish, and poultry purchases of I5I families were employed. These data were obtained from a sample of families in the city of Medford, Massachusetts, and were collected over the 32-week period October I2, I952-May 23, I953.3 Table i gives the distribution of the I 5I families by family characteristics.