Consumer behavior in food consumption: reference price approach

Abstract

Purpose

The purpose of this paper is to show that empirical analysis of consumption of a good, using the same empirical and econometric model as it is done in standard applied demand analysis, may be based on the underlying behavioral model other than the rational choice.

Design/methodology/approach

Reference point approach originally developed by psychologists and later translated into reference price approach by business scholars is used to demonstrate this point. Empirically, a model of consumption of broilers in the USA is estimated using regression analysis and its results and implications are discussed.

Findings

The same empirical model can be used to represent more than one underlying model of consumer behavior.

Research limitations/implications

This paper raises the question of which underlying behavioral theory is valid, and under what circumstances might that validity change. The importance of accounting for reference prices appears to be validated, but the fact that both theories lead to the same or similar empirical formulation does little to secure either theory as right or wrong.

Originality/value

Research in consumer behavior and demand generally assumes the existence of one superior theoretical behavioral model. This paper suggests that such claims are unfounded since standard current empirical modeling of consumer behavior accommodates more than one underlying theory.

Citation

Miljkovic, D. and Effertz, C. (2010), "Consumer behavior in food consumption: reference price approach", British Food Journal, Vol. 112 No. 1, pp. 32-43. https://doi.org/10.1108/00070701011011182