SECTION 2.1 SECTION 2.2 SECTION 2 - Weeblyolchsconsumered.weebly.com/uploads/6/8/8/8/6888548/chap02.pdf · each heading, visualize what ... Key Terms priorities needs wants values

• Write down the coloredheadings in this chapter.

• As you read the text undereach heading, visualize whatyou are reading.

• Reflect on what you read by writing a few sentencesunder each heading todescribe it.

• Reread your notes.

SECTION 2.1Setting Prioritiesand GoalsSECTION 2.2 Managing LimitedResourcesSECTION 2.3 Making ConsumerDecisionsSECTION 2.4 EvaluatingInformation Sources

S E C T I O N 2 . 1

Setting Prioritiesand Goals

As a consumer, what kind of future lifedo you envision for yourself? A com-fortable place to live, the latest gadgets,exotic travel? The quality of your life—whether it’s dreamy or disappointing—will depend on you. The ability to setpriorities and goals can help.

WHAT’S MOST IMPORTANT?The choices you make as a consumer depend in part on

your priorities—your judgments about the relativeimportance of alternatives. In other words, what’s mostimportant to you? Priorities affect many types of deci-sions—how to spend and save your money, which prod-ucts and services to buy, what career path to follow. To bet-ter understand where your priorities come from, it helps tolook at the interrelated concepts of needs, wants, values,and standards.

Needs and WantsIf you were marooned on a deserted island, what would

you wish for? A diary to chronicle your adventures? Amountain bike to climb sand dunes? Your favorite beachtowel? Chances are, you’d desire basic stuff—water andfood to sustain you; shelter and clothing to protect you

53

Objectives

After studying this section, youshould be able to:• Analyze how needs, wants,

values, and standards affectpriorities and goals.

• Distinguish between differenttypes of goals.

• Explain guidelines for settingand reaching goals.

Key Termsprioritiesneedswantsvaluesstandardsgoalsfamily life cycle

54 • CHAPTER 2 Consumer Management Skills

Values can vary based on culture, religiousbeliefs, family upbringing, and other factors.For example, some cultures tend to valuecooperation more highly than individualachievement, while in other cultures theopposite is true. Within the same culture,such things as education, comfort, and econ-omy might be more highly valued by somepeople than others. The values you holdstrongly affect the priorities you set.

StandardsPeople who share the same values may

have very different standards. Standards areestablished levels of quality or quantity tomeasure against. For instance, most peoplevalue success rather than failure—but whatis success? The standard is different foreveryone. To one person, success meansbuilding up a certain amount of wealth. Forsomeone else, success is reaching a positionof leadership in a profession or in the com-munity. Others might define success as doinginteresting and enjoyable work, maintainingstrong ties with family and friends, or mak-ing a contribution to society that feels per-sonally meaningful.

Setting PrioritiesNeeds, wants, values, and standards all

enter into the process of establishing priori-ties. Members of one family may decide that

from the elements. These are needs, thingsyou must have in order to live. The diary,bike, and beach towel are wants—things youdesire but that are not necessary to live.Everyone has similar needs, but wants varyfrom person to person.

Needs must be met before wants, so distin-guishing between them is the first step in set-ting priorities. The difference between needsand wants is clear when the backdrop is adeserted island. It’s not always so clear in every-day life. A need can be met in many differentways—food can be pizza, barbecue, tacos, orhundreds of other possibilities.Your choice willdepend on your wants as well as your needs. Infact, consumer choices are seldom, if ever,based on needs alone. See Figure 2-1.

ValuesValues are strongly held beliefs and prin-

ciples about what is worthwhile. Most peopleshare a core set of common values. Theyinclude honesty, respect, kindness, courtesy,and fairness. These values lead you to bal-ance your own needs and wants with those ofothers.

2-1

A car is a transportation need for many

families. Which car to buy depends on a

family’s wants. What are some of the

wants that might influence this

purchasing decision?

Section 2.1 Setting Priorities and Goals • 55

this year, saving up for college expenses takespriority over replacing their old car. To makethis decision, they consider both the valuethey place on education and their standardsabout what kind of car is acceptable to drive.In another family, buying a car may be ahigher priority, since a reliable car is neededfor the sales job that is a major source ofincome. You and your family must set yourown priorities.

The priorities of individuals and familieschange over time. As you pass through dif-ferent stages of your life span—from yourteen years to early, middle, and late adult-hood—your changing priorities will affectthe decisions you make.

GOALS: TARGETS FORACTION

By setting priorities, you identify what’simportant to you. By setting goals—targetsfor what you want to accomplish—you beginto translate your priorities into action. Goalsgive you direction. They help you focus onthe things you want to achieve and take thenecessary steps to make them a reality. SeeFigure 2-2.

Types of GoalsGoals can be short-term or long-term,

depending on how long they’ll take toaccomplish. A short-term goal may be tosave up for a pair of boots you’ve beenadmiring. A long-term goal might be to pur-sue a career in medical technology.

Sometimes a long-term goal that looksoverwhelming just needs to be broken downinto short-term goals. If saving up enoughmoney to buy a computer seems impossible,try putting aside a certain amount fromeach paycheck. Over time, you’ll meet yourlarger goal.

How Goals ChangeYour goals change as you do. For example,

many people change careers several times.Each time, they set new goals and let go ofold ones.

Goals vary throughout the family lifecycle—the series of stages through which afamily passes. Each family is different, andnot all families go through the same stages inthe same order. However, many familiesexperience stages such as the beginning of amarriage, the birth of children, the parentingyears, the time when children leave home,and retirement.

2-2

The goal of reaching the summit is what

keeps a mountain climber going through

many difficulties. How can goals motivate

you to do your best?


• Set goals with care. Well-chosen goalsreflect your priorities. They should also berealistic—a goal that can’t possibly be metis discouraging. Avoid setting goals that aretoo easy, though. Goals should challengeyou to take a risk and to stretch and grow.

• Prepare to deal with difficulties.Expect obstacles, but don’t let them stopyou in your tracks. Anticipate problemsand think of solutions. For example, ifyou’re saving up for a future purchase,avoid hanging out in malls where you’ll betempted to spend. See Figure 2-3.

• Enlist the support of others. If yourgoal is to improve your math grade, join astudy group or ask your teacher to referyou to a tutor.

• Acknowledge your successes andfailures. If you meet your goal, you canfeel good about your accomplishment. Ifyou don’t achieve a goal, learn from yourmistakes.

People in similar life stages may have sim-ilar goals. Families in the beginning stageoften have financial goals related to careeradvancement, paying off debts, and estab-lishing a home. Parents focus on providingfor their children. Health care and retirementplanning become increasingly importantpriorities in later years.

Achieving GoalsIf you’ve ever failed to keep a New Year’s

resolution, you know that achieving a goal isa lot harder than setting one. Here are somestrategies that can help you reach your goals.

Section 2.1 Review

CHECK YOURUNDERSTANDING

1. What is the difference between wantsand needs?

2. What do people consider when deter-mining their priorities?

3. What strategies can help you reachgoals?

CONSUMER APPLICATIONIdentifying Goals Name one of your prior-ities. Describe one or more goals that relateto this priority. Identify whether they areshort-term or long-term goals.

2-3

People who achieve goals aren’t stopped

by the hurdles in their way. They are

determined to get past them. Give an

example of a hurdle you surmounted to

meet a goal.

S E C T I O N 2 . 2

ManagingLimitedResourcesThink about a goal that you success-fully achieved. How did you go aboutreaching it? Whether you realized itor not, you did it by managing yourresources.

TYPES OF RESOURCESResources include anything that is useful or helpful in

the process of achieving goals or solving problems. Manytypes of resources are available to you as a consumer.

• Human resources are those found within people.They include personal energy, knowledge, experience,skills, talents, and qualities such as imagination anddetermination.

• Time is a resource as well. By making the best use of thetime you have, you can accomplish more than you mayhave thought possible.

• Financial resources have to dowith money. Income, savings, invest-ments, and credit are among thefinancial resources that can help youreach goals.

• Material and technologicalresources include useful items suchas food, clothing, a home, books, tools,appliances, cars, telephones, comput-ers, and the Internet.

Objectives

After studying this section, you should be able to:• Identify types of resources. • Explain the relationship

between scarcity and opportunity cost.

• Describe strategies for managing resources.

Key Termsresourcesscarcityopportunity costbarteringmanagementprocrastinate

57

TEXTLINK

Resources thatsocieties use toproduce goodsand servicesare discussedin Sections 5.1

and 5.2.


choices must be made about how the limitedresources will be used. You’ll learn moreabout this concept in Chapter 5.

The concept of scarcity refers to societies,but it’s an idea that consumers can personallyrelate to. If you had an infinite amount oftime and money, what would you spend themon? You can probably come up with a verylong list. Unfortunately, you don’t haveunlimited resources—no one does. Therefore,you must set priorities.

As you decide which items on your “wishlist” are most important, you also decide—consciously or not—to cross other items offthe list. You give up some wants in order tofulfill others. Economists have a term forwhat you give up when you decide to useresources one way rather than another. Theycall it opportunity cost.

Suppose you have $100 to spend onclothes. You have your eye on shoes that cost$90, jeans that cost $40, and a jacket thatcosts $55. If you buy the shoes, you won’thave enough money left over to buy anythingelse. The opportunity cost of the shoes iswhatever you think the next best choicewould have been—either the jeans and thejacket or two pairs of jeans.

All decisions involve opportunity cost. Itmay be measured in time, energy, or someother resource besides money. If you join the

• Community resources are provided bygovernments and private organizations.Agencies such as the Red Cross, for exam-ple, provide assistance to people in need.Other community resources includepolice and fire departments, hospitals,public transportation, parks and recre-ational facilities, community centers,churches, schools, libraries, and muse-ums. See Figure 2-4.

• Natural resources include air, water,trees, and minerals. Everyone who bene-fits from these resources shares in theresponsibility to use them wisely, asexplained in Section 3.3.

SCARCITY ANDOPPORTUNITY COST

While consumers’ wants are often unlim-ited, their resources are not. Economists talkabout the problem of scarcity—the fact thatbecause of limited resources, an economicsystem can’t possibly produce all the goodsand services that people want. Therefore,

2-4

The benefits provided by community

resources such as libraries are

sometimes taken for granted. What

community resources have you used

in the last week? Would you have

been able to accomplish your goals

without them?

Section 2.2 Managing Limited Resources • 59

2-5

Resources are limited and must be

preserved. How does proper

maintenance conserve resources?

• Substitute resources. When some ofyour resources are in short supply, lookfor ways to use others to accomplish thesame goal. Suppose you don’t haveenough money to buy your friend a birth-day present. You could make one instead,using time, personal energy, skills, andcreativity. When you lack time and per-sonal energy, you might substitute moneyor technological resources, such as a com-puter, to accomplish a goal.

• Exchange resources. Sharing resourceswith someone else is another option. Whenhis vacuum cleaner quits working, yourneighbor asks to borrow yours. In return,he gives you a container of homemadesoup. Bartering, which means exchanginggoods or services with another person,makes it possible to satisfy needs and wantswithout spending money.

swim team, which has after-school practices,part of the opportunity cost is the time youmight have spent hanging out with yourfriends after school. If you decide to be withyour friends, you give up the opportunity tobe on the swim team. Weigh decisions interms of opportunity cost to focus on what’smost important to you.

USING RESOURCESEFFECTIVELY

Since resources are limited, it’s a good ideato increase their benefit by using them wisely.

• Expand resources. In some cases, youcan take steps to increase the resourcesavailable to you. For instance, payingattention in class can increase yourknowledge. Putting money in a savingsaccount instead of a shoebox means it willgrow as it earns interest.

• Conserve resources. Using less, orconserving, makes limited resources lastlonger. There are many examples. Turningoff lights when they’re not needed saveselectricity and money. Combining severalerrands in one trip saves time and energy.Buying a used car instead of a new onesaves money, and proper care will help thecar last longer. See Figure 2-5.


ready to use. Obtain any personal andlegal documents you may need. If otherpeople will be involved in your plan oraffected by it, communicate with themand coordinate your efforts.

3. Implementing. To implement yourplan means to carry it out. Follow theschedule you set for achieving the goal.Track your progress—for example, checkoff steps as they are completed. If neces-sary, adjust your plan as circumstanceschange or as you encounter setbacks.

4. Evaluating. After implementing yourplan, evaluate how well it worked. Didyou reach your goal? Are you satisfiedwith the result? What problems devel-oped along the way? What did you learnfrom this experience?

Managing MoneyAs a consumer, one of the most important

resources for you to manage is money.Developing money management skills helpsfamilies live within their income, get themost value for what they spend, achievefinancial goals, gain a sense of financial secu-rity, and build for the future. Later chaptersprovide advice for handling the elements ofmoney management, including:

MANAGEMENT SKILLSThe strategies you’ve just read about are

examples of good management, the processof using resources effectively to reach goals.By developing management skills, you canget the most out of the resources that areavailable to you, your family, or groups towhich you belong.

The ManagementProcess

When trying to reach a goal, many peoplefollow a four-step management process. Thesame process can be used whether you aremanaging time, energy, money, or otherresources.

1. Planning. Begin by taking a look at thesituation. What is your goal? What prob-lems must be solved? Identify theresources that are available and brain-storm ways to use them effectively. Start alist of the tasks that must be accom-plished. Which ones have highest priority?

2. Organizing. Put the steps you musttake to reach your goal in sequentialorder. Make a schedule, setting a targetdate or time for the completion of eachstep. Gather your resources and get them

DOLLARSandSENSE

Another way to use resources wisely is simplyto do without some things. For example,instead of living in the most expensive placethey can afford and filling it up with gadgets,some people prefer a modest, unclutteredhome. They may do without cable television,

cut back on magazine subscriptions, and usepublic transportation instead of automobiles.In addition to saving money, consumers whochoose a simpler way of life often feel theyreap other benefits, such as reduced stressand more free time.

Living Simply

Section 2.2 Managing Limited Resources • 61

• Estimating income and making a spend-ing plan.

• Paying taxes and keeping financialrecords.

• Using banking services and managing theuse of credit.

• Saving and investing to meet long-termand short-term goals.

• Buying insurance protection.

• Shopping for the best buys on goods andservices.

Managing Time andEnergy

Like any other resources, time and per-sonal energy can be planned and managed.Here are some strategies:

• Stay focused. Identify your prioritiesand goals. Make time for activities thatsupport them.

• Identify time wasters. Do you spendhours browsing aimlessly on the Internet,talking on the phone, or watching reruns?These activities probably don’t enrichyour life or fulfill your goals. Identify timewasters, then either eliminate them or setlimits.

• Get organized. How much time andenergy do you waste looking for mis-placed items? Take time to organize yourcloset, locker, and desk. The payoff ismore time and less frustration.

• Plan ahead. Use a planner or assign-ment book. Write down assignments anddue dates, your work schedule, appoint-ments, and other commitments. SeeFigure 2-6.

• Make to-do lists. Each day, make a listof what you need or want to accomplish.Consult the list throughout the day andcheck off items as you complete them.

• Take action. A to-do list does no good ifyou procrastinate, or put off takingaction. If a task seems overwhelming,identify one small step you can take to getstarted. Then do it.

2-6

What time was my time management

seminar, anyway? Using a planner—print

or electronic—can save time and reduce

frustration.


Influences onManagement

Social and economic trends can affecthow consumers manage time, energy, andmoney. For example, the increase in thenumber of working parents is a trend thatcreates challenges for managing a household.See Figure 2-7. In addition, the population isincreasingly mobile. That makes it morelikely that relatives such as grandparents,aunts, and uncles—who might have servedas a resource by offering help with child care,for example—live across the country insteadof across town. Families and communitiesmust recognize these and other challenges,identify resources that can help, and usethem to the fullest.

• Make use of free time. If you’re goingto spend time standing in line or ridingthe bus, take along a reading assignmentor an interesting article.

• Value other people’s time. If youagree to meet at a certain time, be there sothe other person doesn’t have to wait.When you notice that someone is concen-trating on a task, try not to distract orinterrupt. Your consideration will beappreciated.

Section 2.2 Review


1. Describe three types of resources.

2. Explain the problem of scarcity and howit results in opportunity cost.

3. What are the steps of a managementplan?

CONSUMER APPLICATIONIdentifying Opportunity Cost Browseprint or online catalogs to identify threeitems you would like to purchase that costless than $150. Identify the opportunitycost for each item. Based on opportunitycost, which item would you choose to buy?Explain your decision.

2-7 Just getting out the door in the

morning can be a challenge for busy

families. What other challenges do

working parents face? What resources

might be helpful to them?

S E C T I O N 2 . 3

MakingConsumerDecisionsAs a consumer, you make dozens ofdecisions every day. How you makethose choices affects the quality ofyour life and whether or not you sat-isfy your goals. Examining the wayyou make decisions can help you tobe a more effective consumer.

HOW DO YOU DECIDE?Chances are, some of your consumer decisions are made

without much thought. A purchase made on a whim, with-out planning, is called an impulse purchase. Marketersencourage impulse purchases. For instance, they designbrightly colored, appealing packages and position eye-catching displays near the checkout counter.

Making a small impulse purchase once in a while is not aproblem. In fact, sometimes it’s smart, such as when youunexpectedly find a needed item on sale. However, when ithappens too often or for major purchases, buying onimpulse often results in overspending.

Another way of making consumer decisions is on thebasis of habit. People get into the habit of buying a certainproduct or shopping at a certain store. Habit is not neces-sarily a poor basis for decision making. Used for minor orroutine purchases, it can simplify your life. At times, how-ever, habit can keep you from considering other possibilitiesthat may be better.

Objectives

After studying this section, youshould be able to:• Describe the importance of

making planned decisions.• Explain decision-making steps.• Analyze factors that influence

consumer decisions.

Key Termsimpulse purchasefadsstatus symbolsconspicuous consumption

63


how much time and money can youspend? Also consider what types of infor-mation would help you make this deci-sion. Then get the facts from reliablesources.

3. Identify the options. List as manypossible solutions as you can. The moreoptions you think of, the more likely it isthat you’ll find a satisfying solution. SeeFigure 2-8.

4. Weigh the options. Think about thepros and cons of each option. How welldoes it meet your goals? What conse-quences will it have for you and others?

5. Choose the best option. After weigh-ing all the options, choose the one thatseems best based on everything you’veconsidered. Keep in mind that there maynot be a perfect solution. However, if nooption seems acceptable, go over the pre-ceding steps again.

6. Take action. Once you’ve made yourchoice, carry it out. Making a decisionwithout acting on it accomplishesnothing.

7. Evaluate the decision. Ask yourselfwhether you got the results youexpected. How did your decision affectothers? What might you do differentlynext time? If you made a poor choice,accept responsibility and learn from it.

What’s the alternative? Instead of lettingimpulse or habit guide your choices, baseyour consumer decisions on thought andplanning. Planned decisions are more likelyto bring positive results. Making successfuldecisions not only helps you reach yourgoals, but also gives you a sense of controland self-confidence.

DECISION-MAKING STEPSWhen faced with a complex decision, it’s

sometimes hard to know where to start.Following these seven steps can help youmake informed, rational choices.

1. Identify the decision. What’s theissue or problem? What are your goalsfor the outcome? Who else needs to beinvolved in making this decision?

2. Identify resources and collect infor-mation. Take stock of your resourcesthat relate to the situation. For instance,

2-8

Starting with a list of possible solutions

and then narrowing your options will

help you make effective decisions.

Section 2.3 Making Consumer Decisions • 65

FACTORS AFFECTINGCONSUMER DECISIONS

Decisions are not made in a vacuum.Many factors come into play and influencethe choices you make. Some influence yourdecision making directly; others shape theworld within which you act as a consumer.Becoming aware of these factors will helpyou make better decisions.

• Personal factors. You’ve alreadylearned that needs, wants, values, andstandards affect your priorities and goals,and therefore your decisions. Your physicaland emotional state is also a factor. Beingtired, hungry, or bored, for example, canlead you to spend more money or makedifferent consumer choices than youwould otherwise.

• Family factors. Family customs andlifestyles affect financial priorities and de-cisions. Family size and stage of life haveimpact, too. For example, young coupleswith no children make different financialdecisions than families with children andretired couples. See Figure 2-9. Adults infamilies often work together to reachagreement and choose what is best for all.Sometimes parents teach children andteens about making financial choices byinvolving them in certain decisions.

• Culture. Consumer decisions can also beinfluenced by culture. Traditions, reli-gious beliefs, family roles, language andcommunication styles, and other culturalfactors might lead one family to make dif-ferent consumer choices than another.

• Social factors. People often make con-sumer choices to fit in with a group. Theycan be influenced by fads—interests,products, or styles that people take up withexaggerated enthusiasm for a brief time.On the other hand, sometimes consumerswant to stand out from the crowd. Socialfactors lead some people to acquire statussymbols, possessions or activities bywhich social or economic prestige is mea-sured. Depending on the group, statussymbols can range from a certain brand ofathletic shoes to expensive cars, jewelry,and vacation homes. Another term for thistype of consumer behavior is conspicuousconsumption, purchasing goods or ser-vices to impress others.

2-9

Stage of life affects purchasing decisions.

This young family needs a range for their

first new home. What other items might

they need?


from expert advice to advertising, infor-mation presented by the media exerts aprofound influence on consumers’ deci-sions about what, when, where, and howmuch to purchase.

• The marketplace. Slick and sophisti-cated advertising and promotional meth-ods compete for consumers’ attention, asdo attractive packaging and the allure ofproducts themselves. Often, the market-place creates consumer desire for goodsand services that may not be needed.

• Legal and moral factors. Governmentlaws and regulations, such as those dictat-ing product safety and banking practices,protect consumers and provide them withinformation upon which to base soundpurchasing decisions. Being a responsibleconsumer might involve refusing to buyfrom companies that exploit workers, ani-mals, or the environment.

• Societal and demographic factors.Consumer decisions are affected by trendsin society. Examples include increasedmobility, longer work hours, and themovement of people and jobs from urbancenters to outlying areas. Another factor isdemographic trends. Demographic refersto population statistics. For instance, theaverage age of the population is increas-ing, and the number of single-personhouseholds is rising. Both societal anddemographic factors can affect the wayconsumers earn, save, and spend money.

• Economic factors. Financial resources,such as income level, clearly affect con-sumer decisions. In addition, so does theeconomic outlook on a local and nationallevel. Even economic conditions on theother side of the world can affect U.S. con-sumers and businesses.

• Technology. Advances in technologyimpact consumers in many ways. New orimproved products and services—such aspowerful computers, dirt-repellent fabrics,and more accurate medical tests—can ben-efit consumers by improving their qualityof life. Technological breakthroughssometimes make it possible to producegoods at lower cost, saving consumersmoney. On the other hand, consumersmay be tempted to spend more as theyfeed their desire for increasingly sophisti-cated gadgets. Technological advancessuch as Internet shopping can change theway that buyers and sellers interact to dobusiness. Some innovations, such asgenetically engineered foods, raise com-plex issues that consumers must confront.

• Media. Through print, sound, andimages, the media are an ever-present influ-ence on consumer consciousness. Ranging

Section 2.3 Review


1. Why should you avoid making impulsepurchases?

2. Describe the steps of the decision-makingprocess.

3. Choose three factors that affect con-sumer decisions and explain theirimpact.

CONSUMER APPLICATIONPurchasing Decision Think of a specificpurchase you would like to make now or inthe future. Apply the decision-makingprocess to that purchase by describing howyou would carry out each step.

S E C T I O N 2 . 4

EvaluatingInformationSourcesInformation is the basis of all consumerdecisions. Wise consumers know howto think critically, where to find reliableconsumer information, and how to useit effectively.

THINKING CRITICALLYDo you believe everything you read and hear? Smart

consumers examine information carefully before decidingwhether to accept it as true. Making judgments about thereliability of information requires skill in critical thinking.Critical thinking means applying reasoning strategies inorder to make sound decisions. These strategies includeevaluating information sources, distinguishing betweenfact and opinion, and drawing conclusions.

EVALUATING INFORMATIONKeeping up with constantly changing information can

be a challenge for consumers. Sometimes you may seek outconsumer information, as when researching a major pur-chase. Other times you simply come across information—you might see a product demonstrated on TV or pick up amagazine with an article about investments. No matterhow you obtain consumer information, evaluate it care-fully before allowing it to influence your judgment.

Objectives

After studying this section, youshould be able to:• Evaluate the reliability of infor-

mation sources.• Identify sources of consumer

information.• Explain ways to use consumer

information effectively.

Key Termscritical thinkingcredentialsbias

67


for details about his or her background. Inmany fields, legitimate experts have credentials—licenses, certifications, ordegrees that indicate knowledge and expe-rience in a certain subject area. For exam-ple, the letters “M.D.” after a name indi-cate that the person has a Doctor ofMedicine degree. Consider whether asource’s credentials are relevant to thetype of information being offered. SeeFigure 2-10.

• Is the source biased? Bias is a prefer-ence that might prevent impartial judg-ment. It can sometimes be created by afinancial or business interest. For exam-ple, many magazines run product reviews.The writers and editors do their best toprovide fair and accurate information.However, because most magazinesdepend on money from advertisers, theproduct reviews might be biased towardmaking favorable comments about anadvertiser’s products. Advertising itself isa biased source of information because itspurpose is to sell a product.

• Is the information fact or opinion?“This computer is easy to use” is someone’sopinion. In contrast, “People who buy thiscomputer are entitled to toll-free telephonesupport for one year” is a factual statement.

Reliable information can help you makebetter consumer decisions. Unreliable infor-mation could steer you in the wrong direc-tion—perhaps even leading you to be takenin by fraud. To determine the reliability ofinformation you encounter, ask yourselfthese questions.

• What is the source of the informa-tion? It’s not enough to say that you readit in a magazine, saw it on TV, or found iton the Internet. Look for an identificationof the actual source. For example, whowrote the article? Does the author cite spe-cific sources of information? What personor group runs the Web site? Be wary ofinformation that seems anonymous.

• What authority or expertise doesthe source have? Anyone can create aWeb site, claim to be an expert, or makeup a name for a nonexistent organization.Look for signs that the source is legiti-mate. If an organization is unfamiliar toyou, find out more about it. If an individ-ual is cited as an information source, look

2-10

It takes more than wearing a white coat

or using the title “Dr.” to be a reliable

medical expert. For what types of

information would you consider a

medical doctor to be a reliable source?

Section 2.4 Evaluating Information Sources • 69

Often, consumer information includes amixture of fact and opinion. It’s up to youto recognize the difference.

• How can I confirm the information?If information is factual, try to confirm itby checking other sources. Even if theinformation was accurate at one time, itmight be out of date.

• Is it suspicious? Does the “special invest-ment opportunity” promise to make yourich with no risk or effort on your part? Isthe “miraculous” weight loss product sup-posed to melt away pounds while you eat asmuch as you want? Remember, if some-thing seems too good to be true, it probablyis. Review the warning signs of deceptionand fraud listed on page 43.

Research StudiesSometimes an article, ad, or news report

cites scientific research—for example, “Arecent study shows that…” The mention of ascientific study tends to lend an air ofauthority to information. However, youshould think critically about research stud-ies, just as you would about other sources.

Look for an explanation of who con-ducted the research. What are their scientificcredentials? Who paid for the study? If astudy on preventing gum disease was spon-sored by a toothpaste company, you shouldconsider the possibility that the study wasbiased.

2-11

Legitimate researchers publish

information about their studies in

reputable scientific journals. Other

scientists then review their methods

and try to duplicate the results.

Why is this process essential?

Often, headlines and news reports over-simplify the results of studies. Look for detailsabout how the study was conducted.Remember, too, that suggesting a possible linkbetween two factors—such as a food and adisease—is not the same as proving cause andeffect. In any case, scientists know that onestudy is not enough to prove or disprove anytheory. The results must be verified by thework of other researchers. See Figure 2-11.

SOURCES OF CONSUMERINFORMATION

Whether you realize it or not, you’re sur-rounded by sources of consumer informa-tion. All can be useful in different ways. Turnto sources that are appropriate for the kindof information you’re looking for.


reliable and even essential. Some articlesand programs focus on opinion ratherthan fact, and information from somesources may be biased or unreliable.

• Package information. Labels andpackage inserts often identify what aproduct is made of and give directions forusing it properly. As you’ll learn in Section16.2, some products and services comewith guarantees or warranties. Studyingthis information carefully can help you tochoose products that are right for you andto get the most out of your purchases.

• Advertising. Advertisements and othermarketing materials can keep you up todate on available products and help youcompare prices, features, and services.Remember, however, that advertising isbiased toward persuading you to buy.Section 15.2 will help you learn to distin-guish between persuasive and informativemessages in ads.

• Salespeople. If you have questionsabout a product, salespeople and cus-tomer service representatives can oftenhelp. However, some salespeople are moreknowledgeable than others. Some may be

• Consumer protection agencies andorganizations. Many of the sources ofconsumer protection described in Section1.2 are also reliable sources of consumerinformation. These include governmentagencies such as the Federal TradeCommission, the Federal ConsumerInformation Center, and your state attor-ney general’s office; consumer groups suchas the National Consumers League; con-sumer testing agencies and publicationssuch as Consumers Union and ConsumerReports; and the Better Business Bureau.

• Professional advisors. Some peoplehire professionals to advise them onfinancial matters such as taxes, insurance,and investments. It’s important to makesure that any advisors you work with havethe proper credentials and are worthy ofyour trust. Guidelines for choosing a qual-ified financial professional are explainedin Section 9.5.

• Media sources. TV, radio, newspapers,magazines, and media Web sites provide amixed bag of consumer information.Some of it, such as news reports that alertconsumers about hazardous products, is

Check out these reliable sources of free or low-cost consumer information.• A Web site called FirstGov for Consumers is a gateway to online consumer infor-

mation from the federal government.• The Consumer Action Handbook provides advice and a directory of consumer

resources. It’s availble online or by mail from The Federal Consumer InformationCenter.

• The FCIC’s Consumer Information Catalog lists hundreds of publications of interestto consumers.

Consumer Information

Section 2.4 Evaluating Information Sources • 71

more interested in making a sale than inproviding accurate information.

• Other consumers. You may want toseek an informed opinion from consumerswho have used a particular product orservice. You might talk to a friend abouthis new camera, or ask a family member torecommend an auto mechanic. Some Websites let you view product ratings andcomments that have been posted bydozens or hundreds of people. Keep inmind, though, that other consumers mightnot have the same needs, wants, and stan-dards as you.

USING INFORMATIONEFFECTIVELY

Information isn’t of much value unless youput it to use. Depending on the situation, youmight use consumer information to shop for aproduct or service, plan your finances, resolve aproblem with a merchant, steer clear of fraud-ulent offers, or in any number of other ways.

Organizing the information you find canhelp you make better use of it. For example, ifyou’ve done some research on several compet-ing products, you might list the pros and consof each or make a table comparing their fea-tures. You could put your list or table in a filefolder along with product ratings, advertise-ments, and a list of questions you want to asksalespeople. Refer to this information whenyou shop.

The amount of information available onsome topics may seem almost limitless. It’simpossible to take it all in. Gather as manyfacts and opinions as you need, then make achoice and take action. See Figure 2-12.

Section 2.4 Review


1. Why do consumers need critical think-ing skills?

2. Describe three sources of consumerinformation.

3. Name two ways you can use consumerinformation effectively.

CONSUMER APPLICATIONInformation Search Suppose you’re research-ing music systems for a future purchase.Where would you look for information andwhy? Explain how you would evaluate thereliability of the information you find.

2-12 Make efficient use of the

consumer information that’s available

to you. How has the Internet made

product research easier? More

difficult?

1. Why do you need to distinguish between needsand wants when setting priorities? (2.1)

2. How do your values and standards shape thegoals you set? (2.1)

3. Give an example of a long-term goal and ashort-term goal. (2.1)

4. What is the relationship between scarcity andopportunity cost? (2.2)

5. Give an example of a limited resource andsuggest steps for managing it. (2.2)

6. What are four strategies for managing timeand energy? (2.2)

7. How can making planned consumer decisionshelp you obtain better value for the moneyyou spend? (2.3)

8. Identify the last step of the decision-makingprocess and explain why it is important. (2.3)

9. Why do different families make differentfinancial decisions? (2.3)

10. Describe factors that encourage conspicuousconsumption by the purchase of status sym-bols. (2.3)

11. How can critical thinking help a consumerdetect bias in an information source? (2.4)

12. Name four sources of written consumer infor-mation and identify those that are most likelyto be biased. (2.4)

13. Why is it a good idea to take your productresearch information with you when youshop? (2.4)

C H A P T E R S U M M A R Y

•Needs, wants, values, and standards affect pri-orities and goals. Goals give you a sense ofdirection and help you achieve what’s impor-tant to you. (2.1)

•You can increase the benefit you get fromlimited resources by using them effectively.Developing management strategies will helpyou get the most out of your resources. (2.2)

•A variety of personal, social, economic, andother factors influence consumer decisions.Using decision-making steps will help youmake informed consumer choices. (2.3)

•Consumers have access to numerous sourcesof information about products and services.Consumer information should be evaluatedto determine whether it’s reliable. (2.4)

Recommendation From a Friend: Danneeds a new computer monitor. His friendAnthony recommended the model he justbought, adding, “If you give them my nameand buy a monitor, I’ll get 20 percent off mynext buy.” Dan likes the monitor but has nottaken time to shop around. Why might Danfeel pressure to follow Anthony’s recommen-dation? How can Dan use resources to makethe best buying decision? What should hesay to Anthony? (2.4)


Review & Activities • 73

1. Analyzing Economic Concepts: Give twoexamples of decisions you made recently thatinvolved the use of time or money. What wasthe opportunity cost of each decision? Did youfactor in the opportunity cost when you madethese choices? (2.2)

2. Identifying Alternatives: Suppose a youngsingle person is laid off from a job and has tolive off limited savings for a few weeks.Identify ways to conserve and substituteresources to get through the period. (2.2)

3. Understanding Cause and Effect: In whatpositive and negative ways do advances intechnology affect consumer decisions? (2.3)

1. Achieving Goals: In writing identify one ofyour long- or short-term goals. Explain how itreflects your needs, wants, values, standards,and priorities. Then write an action plan toachieve the goal, including tasks, timelines,resources needed, and barriers anticipated.(2.1, 2.2)

2. Decision Making: Ask members of your fam-ily to identify items they would like to buy ifthey could spend about $100. As a family, fol-low the steps of the decision-making processto agree, hypothetically, on which item to buy.Think about the process. How did shared deci-sion making work for your family? (2.3)

• Family: With your family, write downsome of the members’ personal short-term and long-term goals. Discuss waysthe entire family can be involved inachieving these goals. (2.1)

• Community: With a group of class-mates, poll community members abouthow to use limited funds to support com-munity resources. Interview at least tenteens and ten adults. Ask: (a) Whichservices or facilities should receive moremoney? (b) Which should receive lessmoney? Create a chart to show yourresults in percentages. Compare yourresults with those of other groups. (2.2)

3. Influences on Teens: List several categories ofpurchases you and many teens make on a reg-ular basis, such as snacks and tickets to events.For each category, list factors that affect thechoices. Rank them according to how muchyou think each factor influences teen con-sumer decisions. Compare your list with thoseof other classmates. (2.3)

4. Evaluating Criteria: Create a list of criteria touse in evaluating consumer information. Withyour class, narrow the list to the ten mostimportant. Post the criteria in the classroomfor use throughout the course. (2.4)

Documents

SECTION 2.1 SECTION 2.2 SECTION 2 - Weeblyolchsconsumered.weebly.com/uploads/6/8/8/8/6888548/chap02.pdf · each heading, visualize what ... Key Terms priorities needs wants values