Munich Personal RePEc Archive

No pain, no gain: implications in consumption and economic growth

Sun, Tianyu and Tian, Liu (2023): No pain, no gain: implications in consumption and economic growth.

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Demand saturation occurs along with economic development, but the theoretical basis for demand saturation is lacking. This study adds to literature by proposing a novel concept named utilization cost, which denotes the physical or mental burden incurred to obtain utility. Correspondingly, we distinguish between quantity and quality of consumption and construct a general utility function. With a generative decision procedure, the analysis shows that utilization costs help to explain the economic dynamics across development stages in terms of demand saturation. And, the long-term state of demand is affected by the properties of utilization costs, determining development directions.

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