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Consumption and demand
Understanding how consumers make decisions and what affects their behaviour is of key importance across a wide range of policy issues, from the analysis of indirect taxation to the assessment of competition policy. For example, the most recent developments in industrial organisation focus on how firms in imperfectly competitive markets interact, taking the structure of consumer demand as given. The nature of the equilibria that prevail in different markets depends crucially on the nature of consumer decisions.

Past research at IFS has played a leading role in the development of policy-relevant empirical models of consumer behaviour. Looking forward, our research will put the consumer at the heart of competition analysis by providing a rigorous characterisation of consumer behaviour. This is crucial for designing regulatory structures and the implementation of consumer and competition policy across many markets, from retailing to telecoms.

Our research aims to develop the analysis of consumer decision-making in conjunction with the analysis of newly available Consumer Panel data. We study behaviour in Britain in detail but also engage in comparative research on similar data in Europe and North America.

Price indices and measures of consumer welfare are fundamental inputs into many areas of policy, influencing benefit and state pension levels, and monetary policy, as well as private sector wage bargaining. Price indices vary for many reasons, including the types of goods purchased, where the purchases are made and the extent to which firms have market power. Obtaining useful price indices requires estimates of substitution possibilities and the value placed on new goods by consumers at different points in the income distribution. Demand responses are essential inputs in the design of indirect and environmental taxes. Price discrimination and the effective cost of living across different types of consumers are important for understanding the adequacy of levels of welfare benefits and pensions. The new Consumer Panel data open up an exciting new research agenda.

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Year: 379 publications
01 January 1996
The late 1980s saw a dramatic fall in personal saving rates in Britain and the United States which attracted the attention of academics and policymakers alike.
27 November 1995
01 November 1995
R48
Stephen Smith
In this Commentary, the authors look at the likely effects that real year-by-year increases in road fuel duties will have on the use of cars by households and on their economic welfare, with particular attention to the distributional consequences.
16 August 1995
W95/04
James Banks, Richard Blundell and Sarah Tanner
In this paper we ask whether households are saving enough for their retirement.
01 August 1995
Despite the widespread use of income as a measure of household welfare, there is much to recommend the use of consumption.
01 August 1995
Alissa Goodman and Steven Webb
The rapid growth in income inequality in the UK over the 1980s has excited a good deal of interest and concern.
01 May 1995
C049
Alissa Goodman and Steven Webb
Much of the debate over inequality in the UK has focused on household incomes. This study provides details of trends in household spending levels. It finds that the inequality of household expenditures has risen much more slowly over the 1980s than the inequality of household incomes.
01 May 1995
Ian Crawford and Sarah Tanner
Taxes on alcohol are among the oldest in the UK and are still an important source of tax revenue.
01 April 1995
C047
Ian Crawford and Sarah Tanner
This report looks at some of the economic issues surrounding the current system of alcohol taxes in the UK and considers how far current taxes on alcohol are sustainable as European integration proceeds.
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Browse publications & research

Impact on Society
IFS researchers found that the Saving Gateway was not the best way to support lower income families; government acted on this advice.
In light of Government objectives to increase environmental taxation, we investigate whether the UK tax system is becoming more or less ‘green’.
IFS researchers have monitored the extent to which some households experience higher rates of inflation than others.
IFS researchers have evaluated whether the temporary VAT cut was able to boost the economy effectively.
Government departments used IFS research to inform decision-marking about a temporary cut in VAT.
Methods developed at IFS for measuring wealth were instrumental in establishing a detailed government dataset about assets and debt in Britain.
IFS researchers present and discuss new research on retirement saving with a group of business leaders and policy makers.
IFS develops data on food prices and nutrition to build capacity for policy-relevant social science research.
In a tough economic climate IFS looks at how households are able to cope.
An IFS research fellow is leading an independent review into how to make automatic enrolment into workplace pensions operate best.
IFS researchers develop a model of the Mexican tax system that will be used by the Mexican Government analysts.
IFS researchers have investigated whether it is possible to measure the distributional impact of changes to spending on public services.
IFS researchers have investigated the relative merits of government policies designed to protect elderly households from the coldest winters.