Consumer Rationality and Consumer Sovereignty

Important social benefits of the market system are predicated on the assumption that consumers can effectively pursue their interest in the marketplace. Cause for concern exists to the extent that high consumption expenditures lead to relatively low levels of personal savings in the U.S. To the extent that they do, in fact, over spend, consumers appear to deviate from economic assumptions of rationality. This paper examines four conceptions of rationality (two variants of rational choice theory, institutionalism, and one derived from economic sociology), with a view to evaluating implications for consumer sovereignty under each. By explicitly accounting for differences among individuals, economic sociology appears to offer more realistic policy solutions.