3.2.2 Consumer Spend

Consumers spend money on goods and services.  They may obtain that money from current earnings (derived from their participation in wealth creation) or from other sources of finance: savings, or benefit payments from the government.  Tax, health insurance and mortgage payments might have to be deducted from their earnings before they are free to spend the remainder – their so-called disposable income – which enables them to buy what they want.  Their freedom of choice has several considerable advantages:

  • Their purchasing decisions reflect their personal preferences, not what someone else thinks they might want.
  • People’s tastes keep pace with modernity – and partly define it.
  • People’s purchases can reflect their cultures in a pluralist society.

Economic governance is more acceptable as it increases people’s disposable income, and therefore their opportunity to choose for themselves.

People’s desire to have money to spend is a powerful incentive to earn money, whether through employment or by being self-employed.

Consumer spend is important in providing customers for those who want to create wealth.  When consumers choose to spend their money immediately, rather than save, they boost economic growth.

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