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Determinants of Expenditure on Consumer Durables

Author(s): J. F. Pickering and B. C. IsherwoodSource: Journal of the Royal Statistical Society. Series A (General), Vol. 138, No. 4 (1975), pp.504-530Published by: Wiley for the Royal Statistical SocietyStable URL: http://www.jstor.org/stable/2345213 .

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J. R. Statist. oc. A, 504(1975), 38, art , p. 504

DeterminantsofExpenditureon Consumer DurablesByJ. F. PICKERINGt ndB. C. ISHERWOOD

UniversityfSussexSUMMARYInformationrom urveys f a sampleof 386 householdswas used to

investigatehe xtento whichnformationn the ttitudes,xpectationsndsocio-economictatus fthosehouseholds ould be usedto predictheirexpendituresn consumer urables. Tests usingdifferencef means,discriminantnalysisndmultiple egressionereused. Thediscriminantanalysis chieved igh lassificatoryerformancend it was argued hat tmaybemoremportantopredict hether household illdecide omakea purchasef consumerurable tall ratherhan oattemptopredictheactual evelof expenditurence a purchasehas beendecidedupon. Anumberf variableswerefound o havepredictiveignificancecross hedifferentypes fanalysis arried ut. Manyofthesewere oncerned ithconsumer ttitudes nd expectationsnd it was suggestedhat ttentionshouldbepaid particularlyo obtainingndicationsfexpected ouseholdliquiditynd thewillingnessodevote inancialesourcesothepurchasefconsumer urables.

Keywords: ATTITUDE SURVEYS; FORECASTING; DEMAND; CONSUMER CONFIDENCE;CONSUMER DURABLES; DISCRIMINANT ANALYSIS; MULTIPLE REGRESSIONANALYSIS; PRINCIPAL COMPONENTS ANALYSIS AND SCORES1. INTRODUCTIONIT has been arguedthathouseholdpurchasesofmotor-cars nd otherhouseholdconsumer urables uchas electrical ppliances re influencedytheattitudes ndexpectationsf consumers s wellas bymorereadilydentifiableconomicnfluencessuchas incomes, rices, tc. Katona, 1960). Furthermore,t has beenclaimed hat

changesnsuchattitudesnd expectationsre measurable ndthatrelevantnforma-tioncan be collected ymeansofregular onsumerurveys. n an earlier aperwediscussed omeof thefeaturesf thecontributionsnthis rea andmadesuggestionsforextensionsnd refinementso thetechniques ormally sed forthe constructionof an indexof consumer onfidencePickeringtal., 1973).There is an extensive iteraturewhich indicates that measures of consumerconfidenceo havepredictive ower n time eries orecastingquationsbutattemptsto demonstratehat such information as a contribution o make in explainingvariations n consumerdurablepurchasing ehaviour on a cross-sectional asishave been less successful,: lthough recentAmerican tudy s moreencouragingin thisrespect Dunkelberg, 972).t Present ddress:DepartmentfManagementciences,UMIST, Sackville t,P.O. Box 88,Manchester.t Other ypes fexpectationalnformationuch s buyingntentionsrpurchase robabilitiesare normally eld to have significantross-sectionalxplanatory ower see PickeringndIsherwood, 974).

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1975] PICKERINGAND SHERWOOD Expendituren Consumer urables 505In thispaperwe shallreport heresults ftests rom nterviewsndre-interviewsof a sampleof Britishhouseholds,which ndicate hatpsychologicalmeasures fconsumer ttitudes nd expectations o help to explainvariationsn the recordedexpendituresf those householdsover a 14-month eriod. Following Americanpractice e shalldescribe hese s measures f hewillingnessomakedurable urchases.We shall also consider he contributionf nformationegardinghe socio-economicstatus ftherespondent,hat shis ability o make durable urchases, oth n combi-nationwith nd distinct rom he measures fwillingnesso purchase.The data onwhich his nalysis s based are derived rom urveysfa sampleof386 households, rawn from50 differentreas of Britainwiththe higher ncomegroups over-represented.he sample was initially nterviewedn two batches n

February nd May 1971 and itis informationn ability ndwillingnesso purchasederived rom hese urveys hat onstituteshe ndependentariables or his nalysis.[Thismeans hat ur nformationnattitudesnd behaviour s related o two lightlydifferenteriodsof time. Clearly f somedynamic nalysiswereto be attemptedit would be necessary o ensure hat nformationelated o thesame periodof timefor ll respondents. s the nalysisnthispaper s essentiallytatic,nthat tanalysestherelation etween particular etofvariables n subsequent ehaviour,t doesnotseem nadmissible o add thetwogroupsofrespondentsogether.] ome4 monthsafter he nitial nterviews,hat s inJune nd September 971, herespondents erepersonally e-interviewednd 282 interviews ere completed, responserate of73 percent. As was to be expected, nlya limited umber fpurchases fdurablegoods had been made within he 4 months llowed and in orderto increase heproportionfrespondents aking purchasetwas decided lso to conduct postalfollow-upfter 4months,hat s inApril ndJuly 972. A totalof276replieswerereceived o the postal questionnairewhichasked respondentso check a list ofdurablegoods and indicatewhich heyhad purchased nd in whichmonths nd tosaywhatthe evelof their otal expenditures ad been on the durablegoods listed.tThis revealed muchhigherevelofexpendituren durables nd a smaller roportionofrespondents eported hat theyhad not made any purchases.The actual distri-butions fexpenditurereset out nTable 1. The informationn expenditureevelsprovides hedependent ariables nthis nalysis.Although henumber f respondentsuccessfullyollowed p on each occasionwas more or less identical, he membership f the two groupsof re-interviewrespondents aried by just under 25 per cent. Information as providedby 226respondentst both the 4- and 14-monthtagesbut the otherrespondentsweredifferentn each occasion. It is possiblethat theremayhave been a systematicdifferenceetween he 50 who completed he postal questionnaire ut were notpersonally e-interviewednd the 56 who, havingbeen personally e-interviewed,failed o complete hepostal follow-up. f this s the case and iftheir ifferencesreso strong hat hey utweigh he nfluencef the226respondentshatwere ommonto both surveys hen any differencen the pattern f results btainedfor 4- and14-month uyer ehaviourmaybe a function f differencesnthe amples. However,we have notfound ny evidence hat his s substantiallyhecase and inthis nalysisshall assume that observeddifferencesn the influences n buying ehaviour risefrom heeffect f thedifferentimeperiodsoverwhichtheanalysis s conducted.

tThe goodswere: black and white elevision,aravan, entralheating, olourtelevision,cooker,deep freeze, ishwasher, loorpolisher, ridge/deepreeze, urniture,ew car, recordplayer, efrigerator,pindryer,aperecorder,sed car,vacuum leaner,washingmachine.


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506 PICKERINGAND SHERWOOD Expenditureon Consumer Durables [Part 4,In particular, ince he nfluence f attitudes n expenditure as been shown n timeseries quations o producea best fitwhena lag of one or two quarters s allowedbetween hemeasurementf theattitude nd its reflectionn the evel of expenditure(Mueller,1963; Adams, 1965) we wouldnotnecessarilyxpect he role of consumerattitudesn explaining ehaviour o be the ameforboth he - and 14-monthnalysis.

TABLE1Summaryata onexpenditureevels Frequencies

4 months 14 monthsExpenditure No. of % of No. of % of(?) respondents respondentst respondents respondentst

0 192 68 68 251- 100 49 17 53 19101- 200 12 4 46 17201- 300 4 1 19 7301- 400 7 2 15 5401- 500 3 1 16 6501- 750 4 1 16 6751-1,000 5 2 17 61,001-1,500 6 2 18 71,501+ 0 0 8 3Total 282 276

t Thesecolumns o not sumto 100 due toroundingff.1.1. The Dependent ariablesIn the 4-month eriod32 percentofrespondents eportedt leastonepurchasefrom he ist of 18durablegoods and overthe14-montheriodtheproportionwas75 percent. In all, 120purchaseswerereportedn4 months nd 373 in 14months.The distributionf the actual outlaysforbothperiods s set out in Table 1. The

totalcost of thepurchaseswas ?23,348for monthsnd ?90,192for14 months ndthe highestrecordedexpenditurewas ?3,300. For the 4-monthdata the meanexpenditureerproductwas ?195and themeanexpenditureer respondentofthosebuying nydurable)was ?259. Themeanexpendituref all respondents as ?83 andthemedianwaszero. Forthe 14-montheriod, he quivalent igures ere:meanex-penditure er product ?242, mean expenditure er purchaser 437, mean for allrespondents327 and median?137.t1.2. The ndependent ariablesA widerangeofsocio-economic nd psychologicalnformationollected uringtheinitialpersonal nterviewurveys onstitutes heindependent ariablesforthepurposesofthis nalysis. Theyaremostly iscrete, onsistingfscores on 7 pointt Outlays re recorded ross. n the ase ofnew arpurchaseshis verstatesctual onsumeroutlaysnmany ases since trade-inllowance s often eceived. n our ater esearch e havecollected xpenditureiguresetof trade-inllowanceshough othfigures avetheirdvantagesand drawbacks.


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1975] PICKERINGAND SHERWOOD Expenditureon ConsumerDurables 507semantic ifferentialttitudinalcales describednPickeringtal., 1973),principalcomponentombinationsfthesevariables nd coded answers o other xpectationsand questions egardinghe social and financial ositionof therespondentnd hishousehold.tThese aredescribednTable 2 together ithmeanvaluesforbuyers ndnon-buyersn allvariables. n interpretingheresults,specially fregressionnalysiswith his ort fdata,where here snopriornformationn the ikelyize of the oeffi-cients nd the ign n the stimatedarameterssa criticalndication ftheplausibilityof theresults,t snecessary obear nmind hedirection f thecoding fthe nswersto thevariousquestions.Whilethecodingofmostvariables s fairly bvious nd inkeepingwith hat ommonly sed nother nvestigations,hecodingon the emanticdifferentialcales does notgo inall cases from favourable o an unfavourableoleor vice versa incethedirectionfthescaleswas varied n order o attempto avoidresponse ias.We have arguedpreviously Pickering t al., 1973) thatprincipal omponentsanalysis ouldform usefulmeansofsummarizinghe data in order o constructnindex of consumer onfidence hatreflectedhe multivariatend multidimensionalpsychological ieldof consumer ehaviour nd thatcriteria f interpretabilityndreproducibilityererelevantmeansofassessingwhether particular omponentwasuseful n thisconnection.We concentratedttentionn our earlierpaper upon thefirstwo principal omponentss theywere howntomeet hoseparticularriteria.It is also usefulto investigate hether he combination f variables n principalcomponentsormnd thecalculation fcomponentcoresfor ndividual espondentshas any cross-sectionalxplanatory ower. The variablesOPT 1-8 are thereforeindividual espondentcores alculated n each ofthefirstight rincipal omponents.The key variables nd their oadingson each of thesecomponentswhichbetweenthem ccountfor 65 per centof the variance n theattitude cales) are set out inAppendix . The firstwocomponentsreclearly ery imilar o thosewhich ormedthe basis ofthe ndexconstructionn theearlier aper. Components and IV tendto emphasizegeneral uestionsof economicconfidence,omponents I, III and Vare moreconcernedwithdurablepurchasingonsiderationsnd possible onstraintson this and components I, VII and VIII have rathermore of a generalfinancialorientation.Of course,whenall respondentsre combined n one analysis, hequestionof thereproducibilityf theprincipal omponent tructure oes not ariseso for thepurposesof this cross-sectionalnvestigationur demands neednot bequiteas strict s wouldbe requiredn a time eries ppraisal.

1.3. Statistical echniquesThreeforms f statisticalnalysis reused n thepaper. First, univariateest fdifferencesfmeansbetween uyers ndnon-buyerss reported.The0: 1 split ormof thedependent ariabledistinguishingetween on-buyersndbuyerss consideredina multivariatenalysis singdiscriminantnalysis. This technique, or hecase oftwogroups, s formallyquivalent o applying n ordinaryeastsquares regressionprocedure o an equationwhichhas a dichotomous ependent ariable but offerst In theearlier aperresultswerereported sing 3 attitudecales.Wenowuse 24 attitudescales. AS 22wastheone not ncluded n the arlier aper.Thereason or tspreviousxclusionwas that hewording asfor xperimentalurposeslightlyhanged ver he our urveyseportedthere. lthought seemed he nformationollectedneitherormulationouldbesimilar,twasjudgedwiser o exclude t. Further onsiderationf thematter eads us to conclude hat t isjustifiablend importanto include t in thisanalysisdespite heslight ifferencen wordingbetween he urveys.


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508 PICKERINGAND SHERWOOD Expendituren Consumer urables [Part ,TABLE 2

Listing f ndependentariables sed n the nalysis ogether ith oding sed nd meanvalues or buyersndnon-buyersMean values

14 month 4 monthNon- Non-Description Variable Buyersbuyers Buyersbuyers

(a) AttitudinalndexpectationalariablesAS 1 Financiallywe as a familyre better ff hanwe 3-4 4.2 30 3-6were year go/Financiallywe as a familyre ess well ff hanwewere year goAS 2 Financiallyweas a family xpect o be better ff 3-1 3-8 2-7 3-2nextyear hanwe arenow/Financiallyweas a family xpect o be worse ffnextyear hanwearenowAS 3 My employmentpportunitiesookgood for the 2-5 3-3 2-2 2-8nextyear/My employmentpportunitieso not look goodfor henextyearAS 4 Overthenext 3-5 yearsmy employmentppor- 2-7 3 5 2-3 30tunitiesookgood/Over thenext 3-5 yearsmy employmentppor-tunities o not ookgoodAS 5 There are now good prospectsof continuous 4-7 4*9 4.7 4-6economic rogressnthis ountry/Prospects oreconomicprogressre notgood atthepresentimeAS 6 The developmentf theeconomys likely o be 4-5 4-6 4.4 4.4favourableous as a familyverthenextyear/Thedevelopmentfthe conomys not ikelyo befavourable o us as a familyver thenextyearAS7 The developmentf theeconomys likely o be 4-2 4-4 4 0 4-1favourableo us as a familyver the next3-5years/Thedevelopmentf the conomys not ikelyo befavourable o us as a familyver the next3-5yearsAS 8 This s nowa goodtime omakemajorpurchases 3-5 3 9 3-1 3.7of durable oods/This s nota good time omakemajorpurchasesof durable oodsAS 9 This snowa goodtime otry o buildupsavings/ 3-2 3-2 3-5 3d1This snot goodtime otryo buildup savingsAS 10 This snowa good time o buy tocks, hares nd 4 0 4-2 4 0 4-1unit rusts/This s not a goodtime obuy stocks, hares ndunit rusts

AS 11 There s a majordurable ood would iketobuy 3.5 3.9 3.2 3-6inthenext12months/There are no additionalmajordurablegoods Iwould iketobuy n thenext 2monthsAS 12 There s a majordurable oodthat already wn 3 9 4-6 3-6 4-2that expect oreplacenthenext12months/I donot xpect oreplace ny fthedurables ownin thenext welvemonthsAS 13 My purchases fdurable oods wouldbe affected 4-2 4-2 3 9 4-1bya temporaryncreasen income/


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1975] PICKERINGAND SHERWOOD Expenditureon ConsumerDurables 509TABLE (cont.)

Mean values14 month 4 month

Non- Non-Description Variable Buyersbuyers BuyersbuyersMy purchasesof durable goods would not beaffectedya temporaryncrease nincomeAS 14 My purchases fdurable oods wouldbe affected 3 9 4-4 3-6 441bya temporaryecrease n ncome/My purchases f durablegoods would not beaffectedya temporaryecrease n ncome

AS 15 Prices lways isefaster hanwages/ 3-5 3-7 3d1 341Prices lways isemore lowly hanwagesAS 16 Prices f mostgoodsarerising/ 2-8 2-8 2-3 2-4Prices eemto be prettytable t thepresent imeAS 17 Becauseprices fthemajordurables want o buy 3-7 3-6 3-4 441arerising ought obuyquickly/There s no need o rushntopurchasesustbecauseprices rerisingAS 18 Becauseprices ffoodstuffsnd otherhingshave 3-4 3-2 341 3-4tobuy ndspendmoney n arerising am lessabletobuythedurable oods would ike/Theprice f foodstuffsndother hings havetobuyhave no effectn my ability o buy thedurables would ikeAS 19 If I saw a majordurable hat wantofferedt a 3f7 4f3 3-6 3 9speciallyeduced rice wouldbuy tnow/Price eductions ouldnotencourageme tobuydurable oodat thepresentimeAS 20 I expect obuymoredurable oods nthenext12 3f6 4f3 3f7 4.3months han have done nthe astyear/I do notexpect o buy as manydurablegoods nthenext12months s inthe astyearAS 21 We are currentlyaving up to buya particular 3-4 4 0 3-6 4-2majordurable/We are notsaving p to buy any particularoodat thepresentimeAS 22 I could ffordopayfor nydurable tem wanted 3 0 3 9 3-0 3-2frommy avings/I couldnot ffordopayfor nydurable urchasesfrommy avingsAS 23 I expectmyfinancialommitmentso increasen 3-1 3 5 2-7 3-4thenextyear rtwo/I expectmy inancialommitmentsodecline nthenextyear r twoAS 24 As a country earedoingwell t themoment/ 4 5 50 4-7 4-8As a country e renotdoing owell t themomentOPT 1 Actual respondentcores on the first rincipal- 20 95 - 87 09componentf AS 1-24OPT 2 Actualrespondentcoreson the secondprincipal 07 - 25 *37 -17

componentf AS 1-24OPT 3 Actualrespondentcoreson the thirdprincipal *16 *14 - 25 *11componentf AS 1-24OPT 4 Actualrespondentcoreson thefourth rincipal *12 *26 -*16 00componentfAS 1-24OPT 5 Actualrespondentcores on the fifth rincipal- 05 -*29 *24 -13componentf AS 1-24OPT 6 Actualrespondentcores on the sixthprincipal 04 -*02 .03 *08componentf AS 1-24


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510 PICKERINGAND SHERWOOD Expendituren Consumer urables [Part4,TABLE2 (cont.)

Mean values14month 4 month

Non- Non-Description Variable Buyersbuyers BuyersbuyersOPT 7 Actualrespondentcores n the eventhrincipal 03 -*18 *01 *02component fAS 1-24OPT 8 Actual respondentcoreson theeighth rincipal 07 .04 *03 *02componentfAS 1-24AVS How much oyou xpect o have vailable ospend 3-8 1.9 4-5 3-3

(onconsumerurables)n thenext12months?Coded, cash sumsrising rom -12ASC Is this mountinAVS) more r essthanyouhad 1-9 2-1 1.9 2-0available ospend t the ame timeastyearLess 1, same,don'tknow , more3ES How muchdo you expect o spend on consumer 4-6 2-1 5 0 3.9durables)nthenext12 months?Coded,cash sumsrising rom -12ESC Is this mountinES) more r ess han ou xpected 18 2-0 1.9 2*0tospend t the ame timeastyearLess 1, same,don'tknow2, more3HPAT Whatsyourttitudeousing irepurchaseourself?2-8 2-6 2-9 2-9wouldnot use onprinciple1never eeded o use 2have used but don'tneed 3useful nd don'tmind 4splendid hing orme 5SIMP Wouldyou indicate ow mportantegular aving 1V9 5-6 2-4 3 0is toyouscale of mportance-10SGET Do youhave savings argetorthe oming ear 16 1 7 1*7 1*7Yes 1, No 2

(b) Socio-economictatus ariablesOG OccupationalroupingfHoH 1-8 2-1 1.9 2-1AB 1,C12, C2 3,DE 4A Age ofHoH 3-0 3-2 2-8 3d116-241, 25-34 235-44 3, 45-64 4NP Numberfpeople n thehousehold 3-6 2-9 3.7 3.5actualnumbersBEDS Numberfbedroomsn house 3-1 2-9 3-1 2-9actualnumberMOVE Areyou ikely o move n thenext12 months? 1.9 1.9 1.9 1.9Yes 1, No, Don't knowNY How onghaveyou ived nthis ouse/flat 3*3 3.7 3.3 3.4less than1year 11-2years 23-5years 3

6-10years 411-20years 5over20years 6OWN Do youown hishouse/flatr areyourentingt? 1P2 1-2 1-2 1*2Own1,Rent2,OtherINC Totalhouseholdncome, retax 4-8 3.9 5*0 4.5?0- 749 1750- 999 2


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1975] PICKERINGAND SHERWOOD Expenditureon ConsumerDurables 511TABLE (cont.)

Mean values14month 4 monthNon- Non-Description Variable Buyersbuyers Buyersbuyers

?1,000-1,499 31,500-1,999 42,000-2,499 52,500-2,999 63,000-4,999 75,000-7,499 87,500-9,999 910,000or more 10INCY Canyour amilyncome ereadilyndtemporarily 5 1V5 1-6 1-6increased,.g. byyourwife oing ut to work rbyworkingvertimer extrahard?Yes 1,No 2UNIV Didyou HoH) attendUniversity? 1V8 1V8 1-8 1V8Yes 1,No 2CHILD Do youhave ny hildren 1V2 1P4 1V2 1V3Yes 1,No 2PE Areyoupaying or theprivate ducation f your 1V4 1P2 1-5 1-5childrent themoment?

Yes 1,No 2CAR 1 Does thehouseholdossess car *82 *65 79 *74Not owned ,owned1CAR 2 Does thehouseholdossess second ar *16 *14 *23 *11Notowned0, owned1CTV Does thehouseholdave colour elevision *10 07 *14 07No 0,Yes 1TOTG Measure ftotalnumberfconsumerurabletems 7-4 6-7 7-4 7 0in thehouseholdfromist n footnote np. 505)actualnumber,maximumossiblewas 17HP Do youhave nyhire urchaseutstanding? 1P5 1-4 1P5 1P4Yes 1,No 2STOT Approximatelyowmuchreyour otal avings? 8 0 8-1 7 9 7-8?Nil 11-24 225-49 350- 74 475-99 5100-149 6150-249 7250-499 8500-999 91,000 ndover 10

Notes: The AS variableswere etoutas 7point emantic ifferentialcaleswithnswer oxesdescribeds "agree trongly",agree","agree lightly",agreewithneitherrbothequally", agree lightly",agree", agree trongly". hecodingn each caserangedfrom for tronggreemento the irsttatementn eachpair o7 for tronggreementtothe econd tatementneachpair.Majordurablesweredescribeds items osting ver ?30. It was suggestedheywould ncludenewand usedcars,refrigerators,ashingmachines s wellas majorhouse mprovements.For a detailed escriptionf thesemantic ifferentialcales see Pickeringtal.,(1973).


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512 PICKERING AND ISHERWOOD - ExpenditurenConsumer urables [Part4,advantagesver he attern that hemodel'sack ofhomoscedasticitys not barto the pplicationf discriminantnalysiss it would e in OLS regression.lso,thenaturefthedependentariable nsureshat he rrorsre notnormallyistri-buted, ndusing discriminantnalysisather han egressioneans hat heresno temptationo accord significance"oparticularoefficientsn thebasis ftheirt values-the nly estwhichs appropriates the test ased n the eductionntheoverall esidualumof squares.Further,hediscriminantnalysis echniqueas abuilt-inllocativerocedurehichs usefulnour aseas a means f ppraisingheabilityf he ariablesnwhichnformationasbeen ollectedopredictuccessfullywhetherndividualespondentsere uyers r non-buyersfdurable oods n theperiod nder onsideration.he discriminantoefficientsbtainedrom his nalysismaybe interpreteds similaroBetacoefficientsna multipleegressionnalysis.That s,their elativeizesproviden indicationf their elativemportance.hethirdnalysis ses tandardeast quaresmultipleegressionrocedureso explainvariationsnthe ctual xpenditureevels ecordedyrespondents.Whenwecome ointerpretheresultsfmultivariatenalysis eneed o havesome lear deaof hedegreefmulticollinearitynthe ata.tIngeneralheevel fcorrelationetweenhevariabless lowand t s particularlyoticeablehat heresno substantialorrelationetweenttitudinalrexpectationalataon the nehandand nformationbouttherespondent'socio-economictatus n theother.Thiscertainlyonfirmshe iewhat he ollectionf ttitudinalataprovidesnformationthats notdependentponor argelynfluencedythe ocio-economicositionfthe espondent.It snot asy obesure t whichevel orrelationetweenwovariablesecomesimportant,nd ndeed his s likelylsotodepend pon henumberfalternativeresponseategoriesvailablewithinachvariablend hence he mountfvariancethat nevariable astoexplainn termsf nother. ppendixI sets ut nstanceswhereorrelationsfat least*4havebeenrecorded. ven t this evel, owever,it wouldonly ndicatehat ne variablexplained6percentof thevariancenanother.twill e observedhey reak ownnto fairlymall umberfgroupsfvariableshat recorrelated ith achother.Wheremulticollinearityxistst s ofcourse ot egitimateo concludehat nevariablesunimportantustbecausetdoesnot ppearn the egressionet f t shighlyorrelated ith nother ariablehatsselectednthemultivariatenalysis.n thepresentituation ulticollinearityoesnot eem obea major roblemndtheres little angerhat nevariablemay eoverlookedecauset shighlyorrelatedith nother.Theanalysisn therest f thepaper s divided etweennformationelatingo4 monthsuyer ehaviourndthat elatingo 14 month urchasing.s a greaterrange fexpendituresasobservednthe14-montheriod his s consideredirstand nslightlyreateretail.

2. ANALYSIS OF 14-MONTH EXPENDITURES2.1. Discriminationetween uyers nd Non-buyersA firsttagen the nalysis astoattempto useallthevariablesodistinguishbetweenhose espondentshathadpurchasednydurablendthose hat admadet Strictlypeakingt snotcorrectoreportorrelationsor iscreter dichotomousariables.Our nterest ere s merelynthequestionwhetherhere s meaningfulssociation etween airsof variables nd the evels f correlation ound reunlikelyo give naccurateuidance n thatquestion.


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1975] PICKERINGNDISHERWOODExpendituren Consumer urables 513no durablepurchase. The broadpicture an be obtainedfrom univariatenalysisof thedifferencefmeans ndthedifferencefmeansquaresbetweenhe wogroups.In Table 2 fulldetails f themean valuesforbuyersndnon-buyersn each variableare set out. In Table 3 are listed hose variables orwhich he differencesfmeansquaresbetween uyers ndnon-buyersresignificantt the5 or 10percent evel sthis onstitutes basisforoursubsequent iscriminantnalysis.

TABLE3Listing fvariableswith ignificantean quaredifferencesbetween uyersndnon-buyers,4-monthata

Significantt 5percent evelAS 1; AS2; AS3; AS4; AS 12; AS 19; AS20; AS22;OPT 1; OPT 7; AVS; ES; INC; NP; CAR 1; TOTGSignificantt 10percent evelbutnot t 5percentAS 21; AS 23; AS 24; SIMP; OG; BEDS

The pattern f observationss consistentnd meaningful. omparedwithnon-buyers, uyers re moreconfidentbout their inancial osition nd financial ndemploymentxpectations,nd they avegreater onfidencen the ountry's conomicperformance. uyers eported igherevelsofmoney vailableto spendon durablesand expected o spend arger ums,buttheyweremore ikely o expect heir uturefinancial ommitmentso increase nd thismay haveacted as an incentive o speedupthe urrentateofpurchase.Buyersweremore ikely obe abletopay fordurablepurchases rom heir avings nd weremore ikely o be savingup to buy durables.They ended, owever,oregard egularaving s of ess mportancehannon-buyerswhich uggest hatregular aving nd durablebuyingmay be competitive,t leastwhere hesaving s notfor thepurchaseof a specific urable. Buyershad greaterexpectationsfreplacing urables hat hey lready wned nd expected obuymoredurables han nthepast year nd weremore ikely orespond opricereductions ndurables.Buyershad a higherevel ofgeneral conomic onfidences indicated ytheir cores n thefirstrincipal omponentnd from he eventhrincipalomponentthepattern f meanscoressuggestshatbuyerswere more ikely o be prepared ouse their unds o buydurables hannon-buyers.Turningo the ocio-economicharacteristicsfbuyers ndnon-buyers, e foundthatbuyers ame fromhigh social class groups,had higher ncomes, argerhousesas indicated ythenumber fbedrooms nd a larger umber f people n thehouse-hold. Theyweremore ikely o own a carand topossess already larger umber fdurables.Thisanalysis s highlyncouragingnthat t fits urpriornotions hatpurchasersare more ikely o be those that re both better ble and also psychologically orewillingomakedurablepurchases.Our next tep s toinvestigatehe xtent o whichthevariables an beused ncombination ith achother o classifyorrectlyndividualrespondentss either uyers rnon-buyersnthebasis of heir cores neach variable.The technique sed n thisprocedures a discriminantnalysis, heresults f whichare given n Table 4 parts a) and (b) where hepatterns f hits nd misses re setout ogether ith he caleddiscriminantoefficientsor hemost ignificantariables.t

t Thediscriminantoefficientsre caledbythe quare oot fthevariance-covarianceatrix.


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514 PICKERINGAND ISHERWOOD ExpenditurenConsumer urables [Part4,Two tabulations re required o accommodate he ndividual ttitude cales and theprincipal omponent cores as they learly ould notbe used togethern thesameanalysis.

TABLE4Discriminantnalysis lassificationfbuyersndnon-buyersover14 months

(a) IncorporatingttitudecalesForecast Variables ith

scaleddiscriminantActual Buyers Non-buyers coefficients2Buyers 199 9 AS 3 *52 OG *31Non-buyers 32 36 AS 4 - 33 BEDS *21AS 10 -*20 CTV *31AS 13 -*22 CAR 2 *32AS 15 *20 TOTG -*36AS 16 -*25AS17 -35AS 22 30AVS -*21SIMP *38

SGET *29Wilks A = *69MahalanobisD2 =2-15F = 1P95prob.=05%)D.F.1 = 49D.F.2 = 226S.R. = *851P.S.R. = 671(b) Incorporatingndividualespondentcores nprincipal omponentsfthe ttitudescales

Forecast Variables ithscaleddiscriminantActual Buyers Non-buyers coefficients2Buyers 195 13 OPT 1 *22 OG *27Non-buyers 39 29 OPT 4 *28 NP *26OPT 7 -24 UNIV -*24AVS -*22 BEDS *22ASC -*23 CAR 2 *32ES -*32 CTV 30SIMP *34 TOTG -*32Wilks A = *75Mahalanobis 2 = 1P72F = 2-25 (prob. =02%)D.F.1 = 33D.F.2 = 242S.R. = 812P.S.R. = 676


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1975] PICKERINGAND SHERWOOD Expenditureon ConsumerDurables 515Both partsofthe table ndicate uite a highdegree fclassificatoryuccess S.R.in theTable) with ver80percentofrespondentsorrectlydentifieds either uyersornon-buyersn thebasis of thediscriminantunction.Bothdiscriminantunctionsaresignificantt the1percent evel nd thevaluesofthe tatisticsiven n theTableindicate hat at an acceptable evelof statistical ignificancehe two groupscan bedistinguishedn the basis of theirmultiple haracteristics. here is a dangerofexaggeratinghe importance f the classificationchieved, especiallywhen thediscriminantunctionwhichhas been derivedfrom hedata is also thenused tocreate heforecastsfgroupmembershipFranketal., 1965).This canbeparticularlyimportant henthegroups re of unequal size as they re here. It has beenshownthatfollowinghisprocedureeads to someupwardbias on the successrate statistic(Frank etal., 1965). Whilewedo not have enoughdatato makean independentestofthediscriminatoryunctions hichhave beenfound,which s theproper rocedure,the nterpretationfthepowerof the distributionan bestbe udged bycomparisonwith he uccess ate hatwould have beenproduced upposing hat hetotalnumberof individuals laced in one groupor anotherwereknown. That is, rather hancompare he 85percent uccess ate hownnTable 4(a) with n implicit 0per cent,the boveconsiderationsead us tocomparettoa "corrected"riterionproportionalsuccessrate-P.S.R.) proposedbyMorrison1969)whichhas thevalue67 percent.Thus, giventhe relative izes of the two groupsand the identificationrocedureadopted,we should xpect heoverall uccess ate o be 67per cent; nfact t s betterthan this t 85 per cent, margin ufficiento allow someconfidencen the results.

Similar considerationsnd results lso apply to the success ratesfor individualgroups.Whiletheclassificatoryuccess s encouraging,ttention ouldusefully e paidto the reasonswhy particularndividualshave been misclassified.Are they,forexample, hepeoplethathaveexperiencednexpected hangesntheir ircumstances,causing predicted uyer o abandon a plannedpurchase r makingtpossibleforsomeone o makea purchase hatwouldnototherwise ave beenmade? Unfortu-nately, edo nothave,for his roup fpeople, henecessarye-interviewnformationto allow us to answer hisquestionbut the mpactofwindfalls nd other urpriseeffects ightwellrepay nvestigation.The right-handolumns ndicate hosevariableswith hehighestcaled discrimi-nant oefficientsnd it willbe observed hatbothmeasures fwillingnessnd abilityto purchasemake an important iscriminatoryontribution. mploymentxpecta-tions,attitudes o the opportunitiesf purchasing tocksand shares,effects ftemporaryncome changeson durable buying, ttitudes o prices,expectationsregardinghe bility ofinance urable urchases romavings, xpectationsegardingthe sumofmoney vailableto spendon durables, ttitudes owards he mportanceofsaving nd the ikelihood fachieving savings arget re all attitudinalariablesthatmake a majorcontributiono the discriminantunction.Of thesocio-economicvariables, ccupational roup, wnershipfdurables nd the izeoftherespondent'shouse have themaindiscriminatingole.When theprincipal omponentcores re introduced e find hatcomponents,IV and VII have theclosestrelationwiththediscriminantunction.The firstwoof these are generaleconomic confidence omponents atherthan componentsreflectingurablebuying xpectations, hile he ast one is primarilyoncernedwiththe use of financial esources. As such,none of theseare particularlytronglyconcerned ith pecific urable uyingntentionsndthis s also true fthe ndividual


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516 PICKERINGAND ISHERWOOD - Expendituren Consumer urables [Part ,attitudecales electednpart a) of Table 4. This suggestshat he onger erm(14-month) istinctionetween uyer nd non-buyers more dependent ponconsiderationsf general conomic onfidencend confidencebout he bility obear hefinancialosts fdurable urchasingatherhan urable uyingntentionsas such.The other ariableshat reclosely ssociated ithhis articulariscrimi-nant unctionend o be similarn parts a) and b) ofTable4: measuresf he evelof funds vailable o be spent n durables,ttitudeso saving, he ocio-economicstatusfthe espondentndhisexistingurablewnershipositionre ll relevant.

2.2. Determinantsf ExpenditureevelsDiscriminantnalysiss an effective eans f distinguishingetween ifferentgroupsndinour casewehave shown hat t s possible, sing his echnique,odistinguishuyersromon-buyers.owever,t shelpfulo nvestigatehetherhesamevariablesould lsobe used oexplain ariationsnactual xpenditureevels.For that urposehereforee rana series fregressionquations sing stepwiseordinaryeast quares rocedure,ith measure f he eportedevel f xpenditureby achrespondents thedependentariable.Beforeescribinghe esultsome ommentsrerequiredn certain actorshatneed o be bornenmind n interpretinghem. irst, heperiod f time owhichthese egressionselates a period f14monthsromhe ime f henitialnterviews.Strictlypeaking,heres no reason o assume hat nyparticularariable oes nfact ave n nfluenceor hisengthf ime rthatt mmediatelyecomes elevantonce he ttitudesexpressed.ndeed, ehave lreadyommentedhat t snormallyheld that he ag between ttitude hange nd its influencen change n buyerbehaviouror urabless ofthe rderf 1-2quarters. ther eriodsf imemay emore elevantnd nthenext ection heperformancefthevariablesnexplaining4-monthxpendituresillbe considered. onsequently,heanalysiss essentiallystatic ndnothinghould e inferredrom hese quations lone about he ikelylengthfeffectfparticularactors. ntuitively,owever, e mightxpect hat heinfluencef ocio-economictatus,ndhencebilityobuy,would revailongerhanthat f ttitudinal,rwillingnessopurchase,ariables.Secondly,hemodelon which his tudy fbuying ehaviours based s notmathematicallyigorousndso doesnot end tselfothe ormulationfrigorouslytestable ypothesesn therelationshipshat re ikelyo be encounteredetweenthecoefficients.lso,sincemost fthedata are n codedform,ften otrelatedto an economicontinuum,heres little uidances to theplausibleizeofthecoefficients.owever, nowledgefthe esultsfothertudiesnthis reatogetherwith priori easoningoesprovide basisforudging hetherhe esultsbtainedfromhe egressionnalysisrereasonable. thirdaveatn nterpretinghe esultsconcernsheexistencefmulticollinearityetween hevariables.While hismayinfluencehe electionfa few ttitudecales ndtherejectionf others hat rehighlyntercorrelated,s we have lready oted,hegeneralevel f ntercorrelationis low.Finally,s Table1 ndicated,heres a relativelyighoncentrationf espondentswith eroexpendituresn durable oods. It is possible hat he determinantsfexpenditureverall,ncludinghosewithero xpenditures,ightrove obedifferentfromhose hat nfluencehe ariationnexpenditureevelsfonlyhosewho ctuallymadean outlay reincluded.Consequentlywosetsofregressionquationsrereported,neusinghe xpenditureevels f llrespondentsndthe econd xcluding


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1975] PICKERINGAND SHERWOOD ExpenditurenConsumer urables 517thosenotreporting ny outlay. Table 1 also shows that thedependent ariable snot normally istributed,mplyinghat tcannotbe thoughto havebeen generatedby normally istributedrror,o calling ntodoubttheuse ofthe usualtest tatisticsbased on the normal distribution. o overcome hisproblem o some extent, hedependent ariablewas taken n all equationsto be the logarithm f expenditurerather han the expendituretself, hereby educing he disproportionate eightthat would otherwise e givento extreme alues. The problemof thepresence fzero items n thedependent ariable was overcomeby adding?1 to all recordedexpenditureso that he ogvalue ofexpenditureythosewho hadnot recorded nyexpendituren consumer urableswas O.tThe results f theregressionquationsare set out in Tables 5 and 6. Table 5reportsregressions sing expenditureevels of all respondents s the dependentvariable. Table6is concerned ith nly hose espondents ith on-zeroxpenditures.Each table contains everal eparate quations, hough hesame equations appearin both tables. The equations rereporteds follows:

Equation1: using he et of semantic ifferentialttitude calesas theregressors.Equation2: usingbasic socio-economic ariables s theregressorsogether ithinformationn attitudeso the use ofH.P. and savings.Equation3: adding n furtherxpectational ariablesAVS, ASC, ES, ESC, tothe socio-economic ariablesn equation2.Equation4: adding in to the socio-economic nd expectational ariables nequation 3 objective nformationn the stock of durablegoodsalreadyowned CAR 1,CAR 2, CTV, TOTG).Equation5: using attitudescales, socio-economic, xpectational nd stockvariables equations1 and 4 combined).Equation6: using nlyrespondentcores nthefirstight rincipal omponentsof theattitude cales.Equation7: usingprincipal omponentcores ndsocio-economic,xpectationaland stockvariables equations4 and 6 combined).

TheresultsnTables 5 and 6 canprobably e largely eft o speak for hemselves.However,tmaybehelpfulo comment nwhat eem ous to be themost nterestingand importanteatures.Whiletheoverall xplanatory oweroftheequations s nothigh, heresultsnthisrespect re notunduly urprisingnviewoftheusualdegreesof explanatory owerfound n othercross-sectionalnvestigationsnd the likelyinterveningnfluence f unexpected vents. Attitudes, oth n their cale form ndexpresseds principal omponents,re significantnd do make a contribution henother ypesofvariable re also included. It is interestinghatseveraloftheothersignificantariables-SIMP, AVS and ES-are also attitudinal r expectationalncharacter nd it is surprising hat variablesdealing specifically ith the socio-economic tatus ftherespondentppeartohaverelativelyittle xplanatoryower.The signs n all thevariables reentirely lausible ndweconclude rom able 5thathigher xpenditureevels are more likely o be associated with people who,comparedwith otherrespondents, ere more confident bout theirfinancial ndemployment rospects or thefollowing ear,weresaving up to buy a consumerdurable ndthought hey ouldaffordo finance hepurchase fa durable romheir

t Theregressionsere lso runusing ctualrecordedxpendituress thedependentariable.These do notalter hecorrespondence ith heresults btained rom hediscriminantnalysisand ngeneralheyend ot o fit hedataquite s well s the quations sing logtransformation.


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518 PICKERINGAND SHERWOOD-Expendituren Consumerurables [Part ,

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1975] PICKERINGAND SHERWOOD Expenditureon ConsumerDurables 519N 00 O~ - 0 'o

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520 PICKERING ND SHERWOODExpenditurenConsumer urables [Part4,savings hough hey ttached ower mportance o regular avings, xpected o haveavailable and to spend larger ums of moneyon consumerdurables,had largerfamilies nd already wneda largernumber fconsumer urables. In otherwords,durable purchasesweremorelikely o be made by consumerswho had indicatedgreater conomic onfidencend who had a greater inancialbility nd willingnessto financedurable purchases. The importance f differentinancial ariables nexplaining urable purchases s particularly oticeable nd it seems theymaybethought f as contributingo a measureofthe respondent'siquid assets availablefor hispurpose. While thismay be viewedprimarilys an indication f the abilityto finance urablepurchases, t is likely hatthis lso reflectshe willingness f therespondent o devote his resources o this formof economicactivity ather hananother-e.g. building p savings ora rainyday, buying lothing r foodstuffsrstocks nd shares.Theresultsn Table 6 for nly hoserespondents ho didreportomeexpenditureonconsumer urables ver he 14 months re similar.Higher xpendituresppeartobe associated with greaterconfidence bout the respondent's wn employmentprospects,esser mportancettached o regular aving, feelinghat t was not a goodtime o buildup savings ndan expectationfspendingarger mounts n consumerdurables, higherevelofownershipfconsumer urables lready ncluding secondcar and a greaterikelihood falreadyhaving ome hirepurchase redit utstanding.The general predictive ignificancef the variablemeasuring he numberofconsumerdurables lreadyowned, TOTG, is interesting.he positive ign on thecoefficientsndicates hat the more durables hat are already ownedthehigherslikely o be furtherxpendituren consumer urables.Why hould durableowner-ship begetdurablepurchasesn thisway? It is possible hat he number f durablesalready wned spartially measure fthepsychologicalhoicebysome householdsto acquire consumer urables ather hanto spendtheir unds n someotherway.tSo thenumber f durables wnedbecomes measure fwillingnessobuyconsumerdurables ndhence lmost n indexofa form fmaterialism.t is also likely hat heownershipf consumer urables nvolves commitmentomakefurther,eplacement,purchases f the same temswhen heexistingnes becomewornout or obsolete.The signson the OPT variables ndicate hathigher xpendituresre associatedwithhigher xpressedevels of confidence. t is interestinghat OPT 1 and OPT 4which re the mostrobust f thesevariables nTables 6 and 5 respectivelyrebothinterpreteds indicators fgeneral conomic onfidence.

3. ANALYSIS OF 4-MONTH EXPENDITURESThe analysis eported bove was repeated singthe nformationn expenditurebehaviour ver months rom hedateof the nitial urvey s thedependentariable.With hereductionn thetimeperiodoverwhich xpenditures erereported,ewerrespondents ad actuallymade a purchase nd indeed there s a preponderancefnon-buyers,hat s thosewith ero expenditureevels see Table 1). Nevertheless,the numbers f buyers nd non-buyersre stillsufficientlyargefor nalysis o bepossible although he concentrationfobservationst the zeropurchase evelmayinfluenceheslope ofregressioninesfittedo the data.t There s, not unnaturally,omeassociation etweenOG and INC on the one handandTOTG but n both asesthe evel fcorrelations ess han 4. This uggestshat large roportionofthevariancen thenumberf durables wned s notexplicablen terms f the ocio-economicstatus f therespondentndhishousehold.


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1975] PICKERINGAND SHERWOOD Expendituren Consumer urables 5213.1. Discriminationetween uyers ndNon-buyersThe variableswhich, n a univariate ifferencef means est, istinguishetweenbuyers nd non-buyersre set out in Table 7. Againa consistent attern merges.

TABLE7Listing fvariableswithignificant ean quaredifferencesbetween uyers ndnon-buyers,-month ata

Significantt 5percent evelAS 1;AS 2; AS 3; AS 4; AS 8; AS 12;AS 17;AS 20;AS 23;OPT 1; OPT 2; OPT 3; OPT 5; AVS; ES; A; CAR 2Significantt 10percent evelbutnot t 5percentAS 14; AS 21; SIMP; OG; INC; CHILD; CTV; TOTG

Buyershave greater onfidence egarding heir inancial osition nd prospects ndtheir mploymentrospects.Theyweremore onfidenthat t thetime fthe urveyit was a good timeto make purchases f consumer urables nd, comparedwithnon-buyers,he responses f thosewho subsequently ade purchasesndicated hatthey adconsideredhemselvesikely obuymoredurablesnthefollowing ear ndweremore ikely oreplace durable hey lready wned. Theywere lso more ikelyto be saving p topurchase durable nd expected o have argermounts fmoneyavailable to spendon durables nd they xpected ctually o spendmorethannon-buyers. They weremoreconcerned o buyquickly ecause of fears f furtherricerises. Interestingly,owever,buyerswererathermore likely o anticipate utureincreasesn their inancial ommitments,heyweremoreprone to report hattheirdurable urchaseswould be affectedftheir ncome ell nd consideredegular avingto be less importanthannon-buyers. his rather uggests hat while buyers s agroup regenerallyonfident,heywere lso rather rone o act on theprinciple hattheyshould buy while the opportunity resentedtself nd beforethe situationbecamemoredifficult.The respondent coreson four of the principal omponents f the consumerconfidence ata are also highly ignificant. PT 1 has alreadybeendescribed s ageneral conomicconfidenceomponent nd, as before, urchasers re thosewhoindicated higherevel ofeconomic onfidence.The other ignificantomponentsOPT 2, 3 and 5 areall concernedwith omeaspectof durablepurchasingntentionsand twould ppear hat urable urchasingonsiderationsremore losely ssociatedwith hort unbehaviour hanwith onger erm ehaviour.Buyers endedto have a generally igher ocio-economic tatus s reflectedntheirncomes, ocialclass grouping, hetype f residencenwhich heyived nd thenumber f consumer urables lready wned. Finally,we find hatbuyers end o beyoungernd more ikely o have childrenhannon-buyers.The results fusinga multivariatenalysis o assesstheclassificatoryowerofthe variables n combinationwitheach other re shown n Table 8. The overallclassificatoryerformanceariesbetween 5 and78percent uccess nd these esultsare statisticallyignificantnd better han a random weighted) llocation P.S.R.)wouldproduce. A largenumber f thevariableshave some associationwiththeoptimum iscriminantunctionstablishednthe nalysis.The main ocio-economic


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522 PICKERINGAND SHERWOOD Expenditureon Consumer Durables [Part 4,statusvariables hatare importantre the age of the head of thehousehold, helength f timetherespondent ad lived n his present ome and his ownershipfcars and all durable goods. The attitude cales associated withthe discriminant

TABLE 8Discriminantnalysis lassificationf buyersndnon-buyersover months

(a) IncorporatingttitudecalesForecast Variables ithscaleddiscriminantActual Buyers Non-buyers coefficients2

Buyers 45 39 AS 2 -22 A -49Non-buyers 24 174 AS 4 -*29 NY *37AS 6 *21 INCY *24AS 8 -20 HP *20AS 9 *33 CARl -*34AS 12 -21 CAR 2 *26AS 17 -35 TOTG *26AS 23 -35ASC -28ES *23MOVE *28Wilks A = *76Mahalanobis D2 = 1P45F = 1P38 prob. = 601%)D.F.1 = 39D.F.2 = 242S.R. .777P.S.R. =603

(b) Incorporatingndividualespondentcores nprincipalomponentsf he ttitudescalesForecast Variables ithdiscriminantActual Buyers Non-buyers coefficients2

Buyers 39 45 OPT 1 *48 A 49Non-buyers 25 173 OPT 2 -*41 NY -35OPT 5 -24 INCY -22SIMP *28 CAR 1 *41MOVE -*22 TOTG -*41Wilks A = *80Mahalanobis D2 = 1P15F = 1-72 prob. = 1P08%)D.F.1 = 55D.F.2 = 226S.R. = 752P.S.R. = 609


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1975] PICKERING AND ISHERWOOD - Expendituren Consumer urables 523

function ere hosedealingwith herespondent'sinancial,mploymentnd generaleconomic xpectations, hether t was considered good timeto save and to buydurables ndthe mpact f durableprices n thetiming f durablepurchases.Whenrespondentcores n themainprincipal omponentsre usedwe find hat omponentsI and II are stronglyssociatedwith hediscriminantunctionnd that omponentis also not unimportant. his again suggestshat xplicit urablebuying onsidera-tionsare more mportantverthe 4-monthhan the 14-monthorizon.3.2. DeterminantsfExpenditureevelsWhen the variables re used in explanatoryegression quationswith he og ofthe ctualrecordedevels fexpenditures thedependentariable,wefind he mountof thevarianceexplained s again low, with most equationsexplainingess than10per centofthevariance. The results or ll respondentsnTable 9 indicate hat tis attitudinalnd expectational ariables hat re significantnd robust redictorsfexpenditures.Larger expendituresend to be associatedwithgreater onfidenceabout future mployment rospects, higherevel of funds vailable to spendonconsumer urables, strongereeling hatdurables hould be purchased uickly obeat inflationnd lesser mportancettached o regular aving.tThe attitude caleswhichwere significantn equation1 but not significanthenothervariableswereadded in equation5 indicated hathigher xpenditures ereassociatedwithgreaterfinancial onfidence,xpectationf ncreasing inancial ommitmentsnd a stronger

feeling hat twas not a good timeto be building p savings.The performancefthe scoreson themain principal omponentss encouragingndwhereasOPT 1 is ameasure of general economicconfidence, PT 2, 3 and 5 tend to place greateremphasis on differentspects of consumerdurable purchasing xpectations ndattitudes.The resultsnTable 10 forbuyers nlygive rather etter it ut as they rebasedon only90 respondentsmayhave even ess general pplicability.Expendituresremostlikely o be greater f therespondent wnshis own home,has largerfundsavailable to spendon consumer urables nd a morefavourablettitude owards heuse ofhire urchase.4. CONCLUSIONIt is not oftenpossibleto have access to the resourcesneeded to conductanextensiventerviewnd re-interviewurvey f a groupof consumerso try o under-standaspectsof theirpurchasebehaviour. Although he numberof respondentsincluded n the surveys eported n here s smaller han mightbe ideal forsuchanalysis t is hopedthe results re of nterest o thoseconcernedwithunderstandingandpredictingonsumer urable urchasing ehaviour.Twoimportanteatures eedto be borne n mind n assessing he general pplicability f these results. First,although ll incomegroupswere representedn the sample thehigher roupsweredeliberatelyver-representednd the resultsmayreflect his bias, although here slittle vidence hat household ncome was veryclosely ssociatedwith any of the

fIt is normallyssumedthat consumer onfidencend durablepurchasingre positivelycorrelated.t is, however,rguable hat preferenceorbuying urables ather han aving nda feelinghat urchaseshouldbe madequickly o beat nflations an indicationf a willingnesstomakepurchasesf durables ut at the ametimes a reflectionf a lackofconfidencet leastinthe bility f governmentsomaintain hevalueof savings. n this espect hereforewilling-ness to purchase s not necessarilyndicativef a high evelof consumeronfidence.20


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1975] PICKERING AND ISHERWOOD - ExpenditurenConsumer urables 525

e N I'l 1 ON .0 I'l- I e. r. NI .enI In IN

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526 PICKERINGAND SHERWOOD ExpenditurenConsumer urables [Part4,aspects f purchase ehaviour iscussed ere. econdly,heresults elate o attitudes,expectationsnd buyerbehaviour n 1971 and 1972,a periodwhen nflationwasalready tronglynpeople'sminds. tmaybe that herelationshipsetween ifferenttypes f ttitudenddurable uying ehaviour re a specificeflectionftheparticulareconomic ircumstancesf that time and maynot be generally pplicable n othersortsofeconomic limate.The differentypesof analysisused makeseparate ontributionso theoverallpicture hat s built up. Discriminantnalysis nd testsof thedifferencef meansconcentrate pon differencesetween hose who boughta consumer urable andthosewho did not. Multiple egressionnalysis llows rathermore nvestigationfthe nfluencef consumerttitudesnd characteristicsponvariationsntherecordedlevels f expenditure.While twouldbe incorrectocontrast irectlyheexplanatorypowerofthediscriminantnd themultiple egressionnalyses t does seemvalidtocommenthat heoverall redictive erformancef thediscriminantnalysis ppearsto be superior. t maywell be thereforehat there s a generally igher egreeofhomogeneitymongdurablepurchasersnd that tis more mportanto attemptopredictwhether consumerwillmakea durable urchase tall ratherhan oattemptto predict he actualmonetaryalueoftheoutlay ncea purchasehas beendecidedupon.Table 11sets out in summaryorm he variables nd theparticulartages n theanalysis nwhich hey roved ignificant. here s ingeneral n encouraginglyighdegree fsimilarityetween hevariables elected s significantt thedifferenttageswithin he 14-monthnalysisofbuyerbehaviour nd within he4-monthnalysis.Thereare somepointsof similarityut also somepointsofdifferenceetween hesignificantariablesfor the two timeperiods. Content nalysisoversuch a widerange of tests must inevitably e subject to personal interpretation.Howeverfrom heresults eported erewe wouldconclude hatforboth the 14- nd4-monthperiods greater xpenditures n consumerdurables are incurredby householdswhere:

1. there s greater onfidence bout future inancial nd employment rospects(AS 2, 3, 4);2. the evel offunds vailable to be spentor expected o be spenton consumerdurables s higher AVS, ES);3. theres less commitmento the mportancefregular aving SIMP);4. a larger umber fconsumer urables reowned lready TOTG);5. thesocial class statusof the household s indicated y theoccupation ftheHoH is higher OG).

Notes oTable11: * where: a) differencesf means resignificantt 10percent evel;(b) discriminantoefficientakes value > -2;(c) thevariable ppears nmore han neregressionquation na set ofequations.** where: a) differencesfmeans re significantt 5 percent evel;(b) discriminantoefficientakes value> .3;(c) thevariable ppears n morethanone regressionquationina set of equations.Ninevariables avebeen mitted romhis able s they renot ignificantat any stageof theanalysis. These are AS 5, AS 11, AS 18, OPT 6,OPT 8, ESC, PE andSTOT.


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1975] PICKERINGAND SHERWOOD Expendituren Consumer urables 527TABLE11

Summaryistingf variables ound o besignificantt differenttagesof the nalysis14-monthnalysis 4-monthnalysis

Differ- Multiple Multiple Differ- Multiple Multipleence Discrimi- egression,egression, ence Discrimi- egression,egression,of nant all re- buyers of nant all re- buyersVariable means analysis spondents only means analysis spondents onlyAS1 ** **AS2 ** * ** * * *AS3 ** ** ** ** ** **AS4 ** ** ** *AS6 *AS7 *AS8 ** *AS9 * ** *ASlO *AS 12 ** ** *AS 13 * *AS 14 *AS 15 *AS 16 *AS 17 ** ** ** **AS 19 ** *AS2O ** **AS21 * * *AS 22 ** ** ** *AS 23 * ** ** *AS24 *OPT1 ** * **IOPT 2OPT3 * * ** **OPT4 * **OPT5 ** * ** *OPT7 ** * *AVS ** * ** * ** ** **ASC *ES ** ** ** ** ** *HPAT * **SIMP * ** ** ** * * **SGET * *OG * ** * ** * **A ** ** *NP ** * **BEDS * * *NY * **OWN **MOVE *INC ** *INCY *UNIV *CHILD *CAR1 ** **CAR2 ** ** ** *CTV ** *TOTG ** ** ** ** * ** *HP ** *


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528 PICKERINGAND SHERWOOD Expendituren Consumer urables [Part ,In addition, igher 4-monthxpendituresre also associatedwith:

6. a greater onfidence hat durable purchases ould be financed rom avings(AS 22);7. larger ousehold nd/or ome sizes NP, BEDS).Higher -month xpendituresre also associatedwith:8. a greater onviction hat t was a good time o buy consumer urables nd/ornot a goodtime o save (AS 8, 9);9. a stronger eeling hat because of risingdurable pricespurchases hould bemade quickly AS 17);10. an expectation hat the future inancial ommitmentsf the householdwill

increase AS 23).Theprincipal omponent ombinationsfthe ttitude cale variables ndicate hat hefirstomponentOPT 1) which s a generalndicator feconomic onfidence,as apredictive ontribution o make for both time periods. OPT 7 which relatestoattitudes o the use of financial esources s significantn the 14-monthnalysis.OPT 2 and 5, which carry arger oadingson variables concernedwithdurablepurchasingntentions,re significantnthe4-month nalysis.On thebasis of these esultswe would rgue hatmeasures f consumeronfidenceor the willingnesso make purchases o have ndependent redictive alue. Besidesindicatorsof financial nd employmentxpectations raditionally ollected forforecasting urposes t seems that close attention ught n future o be paid tocollecting n indication f household iquidity nd willingnesso use funds o buyconsumer urablesrather han to put themoney o otheruses,such as to save it.Whether hese ross-sectionalesults re replicable rwhetherhey ouldserve s aguideto time-seriesredictions,ofcourse,not yet stablished.But there oes seemto be some case forbelievinghat hey ould be.REFERENCESADAMS,F. G. (1965). Prediction ith onsumer ttitudes: he ime eries-crossection aradox.Rev. Econ. Stats., 7,367-378.DUNKELBERG, W. C. (1972). The mpact fconsumerttitudesn behavior: cross-sectiontudy.In Human ehaviournEconomic ffairs,ssays nHonor fGeorge atonaB. Strumple, .N.

Morgan nd E. Zahn eds). Amsterdam:lsevier.FRANK, R. E.,MASSY, W. F., andMORRISON, D. G. (1965). Bias nmultipleiscriminantnalysis.J.Marketing es.,2,250-258.KATONA, G. (1960). ThePowerful onsumer. ew York: McGraw-Hill.MORRISON, D. G. (1969). On the nterpretationf discriminantnalysis.J.Marketing es., 6,156-163.MUELLER, E. (1963). Tenyears fconsumerttitude urveys:heir orecastingecord.J. Amer.Statist.Ass.,58, 899-917.PICKERING, J.F., HARRISSON,J.A., andCOHEN,C. D. (1973). Identificationnd measurementfconsumer onfidence: ethodologynd somepreliminaryesults.J.R. Statist. oc. A, 136,43-63.PICKERING, J. F. and ISHERWOOD, B. C. (1974). Purchase robabilitiesnd consumer urablebuying ehaviour.J. MarketRes.Soc., 16,203-226.


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1975] PICKERINGAND SHERWOOD Expenditureon ConsumerDurables 529

APPENDIXMain Loadings fAttitudecales onFirstEight rincipal omponents

I II III IV V VI VII VIIIAS 1 *283 250 *2782 *266 *252 - 207 *434

3 *290 *4024 *301 *3695 *236 *236 - *275 - 2456 *272 253 - 259 - *211 -*2127 *278 *211 -*242 -*2198 *224 *259 *2959 -*224 401 245 - *377 *26810 *343 403 - 33611 *230 - 285 -*29812 *209 - *246 -*209 -*215 -*23913 - 325 -*23914 - 256 -*320 *31415 -*214 - 340 *260 *220 -*261 - 29816 - 239 *346 - 61217 - 304 *351 *38518 -*348 -*298 *23819 *216 *377 *280 - *20820 *222 -*204 30321 - *260 - *223 *27722 *278 *314 - 245 - 21723 - 254 -*44624 *204 - *322%ofvariance 205 11-2 7-6 7.2 5.7 5 0 4-2 39explained


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530 PICKERINGAND SHERWOOD ExpenditurenConsumer urables [Part4,

APPENDIX ICases where orrelationsetweenndividual ariables 4

AS[I 50 AS2 ASS *62 AS6*47 L*42 x46 *52 1 78

AS3 *82 AS4 AS7ASH *49 ASI2 ASI3 *43 ASI4ASIS 053 ASI6 CAR I 51 TOTG

_.4J -*54 -@40 152, ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.AS20 *66 AS21 OG CAR2

AVS *42 ES ASC *52 ESC*46

INCINCY *44 SGET fNP -48 CHILD

,48 52- 41 58MOVE PEA *49 NY

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