Different Economic and Social Factors Which Have Resulted in the Change in Purchasing Habits - Coursework Example

The change in the pattern of consumption towards unhealthy food which results in obesity is an area of concern for Australia. The change in the attitude and perception of people towards fooding habits has been impacted by different factors which include social and economic factors. This essay will look at evaluating the different economic and social factors which has resulted in the change in purchasing habits and will also look into the manner fat tax and other methods will help to bring a change in consumption style. This will help to develop and identify different variables through which obesity can be controlled. One of the most important economic determinants which has resulted in obesity is the cost and income. The development of technology and readily available food at lower cost has increased the consumption of food as people have started to over feed themselves. This is matched by the quality of food which is consumed as the food has different determinants which add towards obesity. The growth in the economy has fuelled a scenario where increasing income has increased consumption and made people consume more food (Goodman, Lovejoy & Sherrant, 2007). This has thereby resulted in the growth on obese people. One economic factor in culmination with another has increased the level of risk by multiplying obesity and has provided more fast food restaurants to crop up. This has provided people with more opportunity and consume those food has resulted in multiplying obesity. Some of the social factors have also impacted the manner in which people consume food. The social class has a role in determining the dietary habits of people. People who are rich consume fruits and healthy food compared to others who don’t have the privilege to purchase those. This has an impact on the health of people leading towards obesity. In addition to it the cultural influence also shapes the eating habits of people. The cultural influence has made people eat more and more fast and readily available items which have higher percentage of fats like burgers and pizza (Bell & Hollows, 2005). This is matched by the fact that people having food based on their traditional beliefs continue to eat healthy food but change in the manner food is prepared and the quality which is offered has resulted in making those people obese as well. The other social factor which influences eating habits is the social context i.e. peer influence, family, and food options. This has resulted in people consuming food which is unfit and adds towards obesity. The overall condition has thereby transformed into a situation where people are continuously witnessing growth in obese people and is a concern. To ensure that obesity is controlled fat tax has been introduced which looks at taxing people with higher rates so that people will reduce the consumption due to high prices. The impact of this is little as the demand for food products which is healthier is inelastic meaning that the change in the price hardly has any impact on the demand and people continue to purchase the same. This is shown in the graph below The above graph depicts that even after having a fat tax which will result in the price to be increased the consumption of food products which results in obesity is hardly impacted. This is seen by a shift in the supply curve which is due to change in price from Ep1 to Ep2 resulting in the consumption to decrease very slightly as compared to the change in price showing that the demand is more towards inelastic and people would consume products which results in obesity despite the fat tax being levied on the products. To control obesity the government and other bodies have further looked at providing special incentives to people who contribute positively by taking steps that can control obesity. The different steps can be taken in different directions like providing tax reliefs to people who adopt healthy habits, providing business with other incentives who forces on their employees to exercise and so on (Miller & Rollnick, 2002). This has to be matched by taking steps which highlights the positive impact that healthy eating and exercise will have can influence people and will result in positive impact for the business. This is shown below Special incentives would mean additional cost which will result in the price to go up but since the benefits will be directly passed on to the final consumer it will have a positive impact on their eating habits. This will thereby result in a decrease in demand as shown from the change in Eq1 to Eq2. This shows that it will create a positive impact and will make people change their eating habits thereby reflecting the positive impact the decision will create in controlling obesity. I feel that the steps which needs to be taken is to incentivise people by highlighting them the benefits of eating healthy and the highlighting the positive impact it will create. This has to be matched by providing other monetary and non-monetary incentive which creates the required urge and makes people to take steps so that obesity can be controlled. Further, incentivising people would mean that the benefit will be directly passed on to the people. This will create a positive impact as it will make people realize and understand the manner in which it will create a positive impact upon their health. This will thereby make people to change their habits (Schnitter, 2004). Levying taxes on food won’t be a good proposition as the demand is nearly inelastic so having a tax will hardly impact people and instead the upper class would continue to eat in the same manner. This will thereby just allow the government to raise money through taxes but will not create the positive impact through which obesity can be controlled and people can be garnered towards a process which will result in better healthy conditions. Different countries have been impacted differently by the manner in which global trade has taken place and the different policies which have been adopted by countries. This essay looks at evaluating a developed economy like US and a developing economy like India to find out the manner in which international trends have impacted the business and economy and the trend which can be seen for the future. The paper will also evaluate the manner in which global financial crisis impacted the economies and the changes that economies have made to bring about a change in the manner business is conducted and to develop a framework so that the future of economy and growth prospect can be determined. A look at the US economy and Indian economy shows that both the developed and developing country rely on external trade and engage in international trade for carrying out their business. The US economy which is a developed economy relies largely on international trade for its business which includes both goods and services. The growth of US economy is largely supported by the large internal markets which has looked towards exploration of telecommunication and transport which has thereby reduced the level of cost and ensured more and more opportunities of growth. The US economy has vast natural resources like rivers, arable land and minerals which have contributed towards the long term growth through experimentation, entrepreneurship and risk taking. The growth for the US economy has been driven by businesses based on outsourcing and purchase of different goods and services. This has been supported by the fact that strong R&D expenditure has been made towards economic growth through the different research capability which has been generated. The innovation has ensured that US economy is able to consistently able to witness in growth of the service sector. The development of international business has been technology driven and the economy relies largely on other developing nations for their outsourcing business. The overall framework has enabled the US economy to generate better growth opportunities and have been able to shape up their performance. The growth rate thereby in US was at an average annual rate of 5 percent which is remarkable considering the fact that the markets are saturating and research and development is an option through which the economy has been able to gain momentum (Lall, 2003). While looking at the performance of the Indian economy the government had an autocratic and inward oriented strategy. The main elements contributing towards the performance was import substitution and protectionism as a measure through which the domestic industry can be protected. The government has strong regulations with regard to the FDI and technology focused on self reliance instead of looking at developing policies which would help to improve performance. The period of 1950 to 1980 thereby witnessed a growth rate of 2 to 3 percent which is very slow compared to the manner in which the other economies were performing where the growth rates was between 5 to 10 percent. The period of 1980’s witnessed widespread revolution with the opening of the economy and easing expansion strategy of large firms through the reduction of price controls and reduction in corporate taxes. The liberalization process looked at reducing investment licensing, privatizing some state-owned enterprises, allowing automatic approval of FDI in some sectors, and reducing the number of products reserved for small-scale industry. The liberalization ensured that more and more FDI flowed in the country and the entire mechanism looked at ensuring that the growth rate was more than 6 percent (Dahlman and Utz, 2005). Increase in international business due to removal of restrictive practice act and developing a platform for international process helped to multiply the overall avenues through which better business opportunities will be developed. Continuous growth and inflow of funds through further helped to develop the economy at a rate higher than 6 percent to around 8 percent. This resulted in a process where international trade continued to grow and the momentum was created through which the overall perspective of India was developed. The region thereby witnessed growth in the service sector industry as availability of cheap labour and other opportunities ensured that the process would help to consolidate the position of India in world trade (Berger, 2006). The overall mechanism through which Indian economy worked in the last few years shows increase in the presence towards international business. One of the prime reasons which made India looked to increased international bodies is that it allowed to create the opportunity through which the different resources were used in the best possible manner. This is supported by the fact that India has a huge labour base which is cheap thereby providing an opportunity through which the cheap labour can be used to develop the business. This fundamental was worked on and led towards consolidating the position which helped to develop the production and the service sector. Along with it the availability of different natural resources and opportunities through which better momentum was gained helped the Indian economy to look towards external trade and impacted them in a positive manner. The recent economic recession in 2008 had impacted the world economies and created doubts regarding the manner in which international trade was impacting the business. The presence of international trade and economies engaging into trade with one another created a fundamental through which economic recession impacted the world economies. The major reason which have been identified and led towards the global financial crisis is the housing bubble burst. The fact that the US housing markets which at reached the all time high crashed and fell by over 40% which impacted the liquidity situation within the economy (Gruen, Plumb and Stone, 2005). The impact was so strong that it resulted in a severe crisis as stock markets plummeted, investments reduces, a liquidity shortage was created, exposed the different gaps which were present in the present reforms and regulations. The other reason which can be attributed towards the global financial crisis is the process through which easy credit was available to the borrowers. Low credit rate ensured easy financing which multiplied the borrowers borrowing money for different purposes. The perceived rate of interest which was 6.5% in 2000 was further lowered by 1% by Fed due to the fear of deflation and dot com bubble burst. This made the households raise money to fulfill their daily requirements with the expectation that the situation would soon improve and would ensure that the loans would be easily paid off (Draghi, 2008). This thereby shows the contagion effect which impacted the word economies and made it difficult for economies to arrive at a platform through which better business opportunities can be created. Economies after the crisis started to develop policies and process which were aimed towards strengthening the local economy through better reforms so that overall performance improves. This was matched by protectionism and policies which were aimed at identifying the different areas through which investment were made. Care and precaution is being taken to ensure that the different investment which is made doesn’t impact the liquidity. This has been matched by strengthening of economic and banking reforms which will help to reduce the impact of such a financial crisis and will ensure that the economies carry out their business in a similar manner and with continuous support of each other. To deal with the issues and to ensure that better economic reforms can be made the world economies have developed different gates which will look at reducing the overall impact of such a financial crisis. Having gates instead of wall means that entire protectionism measures haven’t been adopted but economies have become more watchful and look towards finding out the manner in which contagion effect can be limited. The gate at this juncture refers to the different mechanism and reforms which have been developed so that better monitoring can be ensured. This will thereby help to ensure that the different inflows and outflows are better monitored and the economies are in a position to reduce the impact. This will also provide the required discretion through which economies will be able to choose the direction they want to work on. This mechanism will ensure that economies are able to carry on with the international trade but while looking to maintain the international trade specific measures have been developed which will ensure better monitoring and will provide the mechanism through which the overall long term prospect of the business can be generated. The different countries like developed and developing countries have taken a different attitude towards it. It has been identified that developing countries have become circumspect and have developed reforms which looks at ensuring that the impact of financial crisis is reduced. Developing economies have further taken the policy of protectionism to a certain degree so that they are able to safeguard their economic performance. The developed economies on the other hand has looked at ensuring that they continue to work with the same fundamental but have become watchful so that the manner in which they work is better monitored which will reduce the chances of a financial crisis and will provide the required fundamentals through which the business can grow (Rudebush, Sack, and Swanson, 2007). The different economies have thereby been shaped differently but mostly all economies around the globe have opened up and have developed policies which look at increased international trade with one another. This has created a positive impact on the long term performance and has helped to achieve higher growth rates and better use of the different resources. The financial crisis of 2008 was a step backward but slowly with the passage of time the reliance on one another economy has increased which has been due to continuous developed of reforms and mechanism which looks at strengthening the economy. This will further help to shape up the business and ensure that the differences which is present between the developed and developing countries gets reduced and the economies are able to perform better. This would lead towards transfer of resources and would create a platform through which economic growth will be achieved and the society on a large will be able to gain due to it. References Bell, D & Hollows, J (2005). Ordinary lifestyles: Popular media, consumption and taste. Maiden, England, Open University Press. Berger, S., (2006), How We Compete: What Companies around the World are Doing to Make it in Today’s Global Economy, Random House, New York. Draghi, M. (2008). Combining the global financial crisis – the role of international cooperation. BIS Review 160/2008 Dahlman, C. J. and A. Utz (2005), India and the Knowledge Economy: Leveraging Strengths and Opportunities, World Bank, Washington, D.C.. Goodman J, Lovejoy, P E & Sherrant A (2007). Consuming habits: global and historical perspectives on how cultures define drugs. London, Rouledge Gruen, D., Plumb, M. and Stone, A. (2005). How Should Monetary Policy Respond to Asset Price Bubbles? Reserve Bank of Australia Research Discussion Paper no 2003-11 Lall, S. (2003), Foreign Direct Investment, Technology Development and Competitiveness: Issues and Evidence, in Competitiveness, FDI and Technological Activity in East Asia, S. Lall and S. Urata, eds., Edgward Elgar, Northampton. Miller W.R, & Rollnick S (2002) Motivational Interviewing: preparing people to change. Addictive Behaviour, Guilford Press, London 2nd edn. Guilford Press, New York Rudebush, G., Sack, B. and Swanson, E. (2007). Macroeconomic Implications of Changes in the Term Premium. Federal Reserve Bank of Saint Louis Review, July-August 2007, 89 (4), pp. 241-69 Schnitter J (2004) Education and the changing shape of the income gradient in health. Journal of health and social behaviour, 45 (3) 286-305 Read More