Dollar voting is an analogy that refers to the theoretical impact of consumer choice on producers' actions by means of the flow of consumer payments to producers for their goods and services.

Overview

In some principles-of-economics textbooks of the mid-20th century, the term "dollar voting" was used to describe the process by which consumers' choices influence firms' production decisions. Products that consumers buy will tend to be produced in the future. Products that do not sell as well as expected will receive fewer productive resources in the future. According to this analogy, consumers vote for "winners" and "losers" with their purchases. This argument was used to explain and justify market allocations of goods and services under the catchphrase "

consumer sovereignty Consumer sovereignty is the economic concept that the consumer has some controlling power over goods that are produced, and the idea that the consumer is the best judge of their own welfare. ''Consumer sovereignty in production'' is the controlli ...

". Consumer

boycotts A boycott is an act of nonviolent resistance, nonviolent, voluntary abstention from a product, person, organization, or country as an expression of protest. It is usually for moral, society, social, politics, political, or Environmentalism, envir ...

sometimes aim to change producers' behaviour. The goals of selective boycotts, or dollar voting, have been diverse, and have included a desire to see decreased corporate revenues, removal of key executives, or reputational damage. The modern idea of dollar voting can be traced back to its development by James M. Buchanan in ''Individual Choice in Voting and the Market''. As a

public choice Public choice, or public choice theory, is "the use of economic tools to deal with traditional problems of political science".Gordon Tullock, 9872008, "public choice," ''The New Palgrave Dictionary of Economics''. . Its content includes the st ...

theorist, Buchanan considered economic participation by the individual to be a form of pure democracy. Also known as political consumerism, dollar voting's history in the United States can be traced back to the American Revolution, when colonists boycotted several British products in protest of taxation without representation.Newman, Benjamin J., and Brandon L. Bartels. "Politics at the Checkout Line: Explaining Political Consumerism in the United States." Political Research Quarterly 64, no. 4 (2011): 803–17. . If voters feel disenfranchised politically, they may instead use their spending power to influence politics and the economy. Consumers use dollar voting because they hope to impact society's values and use of resources.

Criticisms

Dollar voting has faced criticism in modern America for being class-bound. Dollar voting is archetypically used by middle and upper middle class consumers who spend their money at local farmers markets, community agricultural programs, and the preparation of "slow food".Haydu, Jeffrey. "Consumer Citizenship and Cross-Class Activism: The Case of the National Consumers' League, 1899–1918." Sociological Forum 29, no. 3 (2014): 628–49. . These purchases do not affect low-income producers and consumers in the food market. Dollar voting has also been criticized as a form of conspicuous consumption for the well-off, serving more as

virtue signalling Virtue signalling is the expression of a moral viewpoint with the intent of communicating good character. Definition "Virtue signalling", according to the '' Cambridge Dictionary'', is "an attempt to show other people that you are a good person, ...

than actual consumer preference. Dollar voting has also been criticized for being a sort of consumer vigilantism. While most economists and economic philosophers accept that consumers have a right to their personal moral choices in the market, large-scale movements to influence consumer spending could have potentially dangerous implications. Efforts to encourage corporations and firms to act in environmentally friendly ways have become popular. It is unclear whether firms that create negative environmental externalities will actually change their method of production to satisfy such desires.Johnston, Josée. "The Citizen–Consumer Hybrid: Ideological Tensions and the Case of Whole Foods Market." Theory and Society 37, no. 3 (2008): 229–70. . Dollar voting also could dissuade citizens from law-making efforts to check unmitigated self-interest in firms and consumers, instead shifting this responsibility over to the market.

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References

Voting theory Economics catchphrases Microeconomics

Overview

Criticisms

See also

Notes

References