• Dr Ritu Tiwari

Many of economic theories based upon income – expenditure hypotheses, although it is the most dominant factor to determine consumption ability, but form the traditional economic theories other factors are also playing very important role. In this paper we will empirical examine the theory of demonstration effect of Prof Regner Nurkse and Dusenberry hypothesis with special reference to Nagpur and Bhopal city. A very important principle has been propounded regarding consumption, viz.; that an individual’s consumption docs not merely depend on individual’s own income bur it is very much influenced by the standard of living or consumption of his friends and relations. When a man sees that some of his friends and relatives have refrigerate, scooter, radio or TV set, good furniture, good clothes, etc. he likes to imitate them and is desirous of ‘possessing and using these things. As soon as he .can afford or when his income increases he buys such things. This means that instead of increasing his savings, when his income increases, he increasing consumption. Thus, consumption does not depend upon absolute real income but on relative level of real income. That is, consumption expenditure does not depend on our own purchasing power but on what is being spent by other on the purchase of luxury articles. An eminent American economist Dusenberry has called it ‘Demonstration Effect.’ We have selected variables to investigate the impact level of demonstration effect on the buying behaviour of the consumer. Buying decisions of consumers may be depend on the following factors: Income, Age, Gender, Education, House-Hold Size, Occupation and Religion.

consumption, demonstration effect, factors, consumption behavior,

"Empirical analysis of demonstration effect on consumption behavior in Nagpur and Bhopal city", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.5, Issue 6, page no.265-271, June-2018, Available :http://www.jetir.org/papers/JETIR1806832.pdf

"Empirical analysis of demonstration effect on consumption behavior in Nagpur and Bhopal city", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.5, Issue 6, page no. pp265-271, June-2018, Available at : http://www.jetir.org/papers/JETIR1806832.pdf