Theory of Consumer Behavior: An Islamic Perspective

Muhammad Akram Khan

MPRA Paper from University Library of Munich, Germany

Abstract: The paper supplements the theory of consumer behavior with insights from the primary sources of Islam. A consumer who maximizes utility operates within four dimensions: moderation, extravagance, waste, and niggardliness. These dimensions take different meanings in each social stratum. A complicating factor is the context of consumption which could be individual, social, or public. For each social stratum and for each context, these dimensions have different meanings. The paper suggests using the methodology of behavioral economics for defining the dimensions of consumption. It elaborates the concept of marginal propensity to consume into four propensities: marginal propensity to moderation, extravagance, waste, and niggardliness. That necessitates re-defining the law of demand, leading to four curves instead of the one usually found in the economics textbooks. The last part of the paper relates consumer behavior with material well-being and happiness and concludes that moderation leads to the highest levels of happiness as compared to other dimensions of the consumer behavior.

Keywords: Consumer behavior; extravagance; waste; moderation; law of demand; material well-being and happiness (search for similar items in EconPapers)
JEL-codes: E21 (search for similar items in EconPapers)
Date: 2020-11-11
New Economics Papers: this item is included in nep-hap, nep-hme, nep-isf and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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