The main objective of this study is to utilize an engineering concept in order to propose a mathematical model to correlate consumer spending, utility and income. The difference between the proposed model and the Keynesian consumption theory is explained by the fact that the Keynesian consumption theory takes into account the consumption of costumers with no income. The effects of marketing, bank loans and credit debt on consumer spending are also analyzed using the general equation of transport phenomena and mathematical models are presented for the first time. Based on a case study, marketing has increased the utility (driving force) by 61%. Taking into account the theory of consumption smoothing, bank loans also provide the consumer with additional spending power by decreasing the resistance for consumption. In case of excessive debt, customers might spend the money only to buy the “utility” in order to be able to repay the debt. In this situation, the effects of debt are described in the proposed engineering model as a decrease in income (extra resistance to spend money).
Inhaltsverzeichnis (Table of Contents)
- Introduction to the study
- Dynamic Systems & their Universal Law
- Gross domestic product and consumer-based economy
- Proposed engineering model for consumer spending
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This study aims to develop a mathematical model, based on an engineering concept, to correlate consumer spending, utility, and income. It aims to incorporate the effects of marketing, bank loans, and credit debt on consumer spending into this model.
- Engineering concepts applied to consumer spending
- Relationship between consumer spending and income
- Impact of marketing on consumer utility and spending
- Role of bank loans and credit debt in influencing spending patterns
- Mathematical modeling of consumer behavior
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction to the study: The study proposes a new mathematical model to correlate consumer spending, utility, and income. It utilizes an engineering concept to analyze the effects of marketing, bank loans, and credit debt on consumer spending.
- Dynamic Systems & their Universal Law: This chapter explores the concept of dynamic systems and their universal law, drawing from examples in physics and engineering. It introduces the generalized relationship for transport phenomena, which is the foundation for the proposed consumer spending model.
- Gross domestic product and consumer-based economy: This chapter examines the role of consumer spending in the gross domestic product (GDP) and discusses the importance of consumer-based economies. It outlines the expenditure approach and income approach for calculating GDP, emphasizing the significant contribution of consumer spending.
- Proposed engineering model for consumer spending: This chapter presents the proposed engineering model for consumer spending, which utilizes the concept of transport phenomena to analyze the factors influencing consumer spending. It compares this model with the Keynesian consumption function and discusses the limitations of the latter.
Schlüsselwörter (Keywords)
Key terms and focus topics of this study include consumer spending, utility, income, marketing, bank loans, credit debt, mathematical models, engineering concepts, transport phenomena, Keynesian consumption theory, gross domestic product (GDP), and consumer-based economy.
- Quote paper
- Dr. Zin Eddine Dadach (Author), 2019, Effects of marketing, bank loan and credit debt on consumer’s spending. Mathematical models based on an engineering concept, Munich, GRIN Verlag, https://www.grin.com/document/458100
