By Jeffrey James
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Additional info for Consumer Choice in the Third World: A study of the welfare effects of advertising and new products in a developing country
There are many factors that determine which of these models should be applied to a particular set of multidimensional data. A fundamental determinant of this choice is the distinction between metric and non-metric scaling. Metric versus non-metric multidimensional scaling Non-metric MDS models seek to represent, in a reduced number of dimensions, only the ordinal relations in the original data. Metric methods, on the other hand, attempt to reproduce a linear approximation to the numerical values of the input data.
8. Lancaster (1971) op. , p. 7. 9. This example is based on Loren V. Geistfeld, 'Consumer Decision Making: The Technical Efficiency Approach', The Journal of Consumer Research, vol. 4 (June 1977). 10. Lancaster (1971) op. cit. 11. K. Lancaster, Variety, Equity and Efficiency (Blackwell, 1979) p. 23. 12. R. Hendler, 'Lancaster's New Approach to Consumer Demand and its Limitations', American Economic Review, vol. 65 (March 1975) p. 195 (emphasis added). 13. Lancaster (1971) op. , p. 114. 14. The most recent edition of Consumer Behavior by James Engel, Roger Blackwell and David Kollat, for example, identifies the following stages: problem recognition, search, alternative evaluation, choice and outcomes.
The characteristics approach, however, does offer the basis of such an appraisal because it analyses the shift in the demand curve not only in terms of changes in taste but also in terms of the information about product characteristics that is conveyed by advertising. That is to say, a change in demand may be decomposed into these two separate effects (although in practice they may be difficult to disentangle). Taste changes pose the same sort of problems in the characteristics approach as they do in the traditional theory; but with the characteristics approach it is possible to analyse the informational effects of advertising independently of these problems.
Consumer Choice in the Third World: A study of the welfare effects of advertising and new products in a developing country by Jeffrey James