Introduction: Demand, Complexity, and Long-Run Economic Evolution

Abstract

Over the past two centuries, the unprecedented expansion of consumer spending across advanced economies has been an essential driver of long run-economic growth, innovation, and prosperity. So essential in fact, that increases in consumer purchasing power are also frequently mentioned as a main reason for why long-run economic growth is inherently desirable: more growth offers consumers greater opportunity to better satisfy their needs and wants. At the same time, the underlying problems that consumers seek to satisfy are also fundamentally changing: as the overall share of spending dedicated to the satisfaction of basic needs has declined, more spending is inevitably dedicated to complex activities and domains in which consumers can exercise a higher degree of discretionary power. In these new domains, the information and social environment play a much greater role in shaping the orientation of consumer spending. These long run trends raise new questions, such as: Will levels of consumer spending continue to grow as they have recently? Can we expect consumer welfare to benefit from future consumption growth the same way that it has in the past? This considers the long-run evolution of consumption patterns alongside the social, behavioural, and technological forces that have shaped, and indeed motivated them. In doing so, this collection of chapters contributes to a better understanding of the structural changes to consumer demand that are currently taking place in advanced economies and their implications for how we understand and strive for economic growth and consumer welfare amidst.