Measuring What Really Matters to Consumers

Virtually every major interest group except consumers has developed a ranking system or report card that can be used to galvanize the public and pressure policy makers for change. This article discusses the potential value of consumer-relevant indices that permit international comparisons and addresses some of the challenges to constructing these measures. ********** Measurements are much more than neutral scientific instruments; measurements can be potent political tools as well. For example, at least eight organizations rank the "business climate" or "competitiveness" of U.S. cities and states as a means of pressing for public policies that favor business and promote economic growth (Fisher 2005). In another policy domain, think of the publicity that attends the annual release of the Kids Count Data Book, a report on the status of children in the United States (Beavers, 2007). By sharing data with "policy makers, advocates, practitioners, and citizens," the Kids Count report aims to "enrich local, state, and national discussions on ways to improve outcomes for America's most vulnerable children" (p. 3). Influential measurement initiatives take place at the international level as well. Several annual ratings address economic and political freedom around the world (Gwartney and Lawson 2006; Kane, Holmes, and O'Grady 2007; Puddington and Piano 2007; Transparency International 2007) and a country's global competitiveness (Lopez-Claros et al. 2006). Other international report cards examine human rights issues (Amnesty International 2007; Human Rights Watch 2007) and the state of the natural environment (Esty et al. 2005; Hails 2006). Yet, there does not exist a consumer equivalent of Kids Count or measures of consumer climate. No one appears to be constructing "people's yardsticks" (Nader 2003). CONCEPTUAL ISSUES IN MEASURING CONSUMER WELL-BEING The first task in creating consumer-relevant indices is determining what exactly should be measured. Any appraisal of consumer well-being must obviously include consumption per se, but that is not enough. A more expansive set of measures should be considered as well. Many researchers take pains to separate consumer well-being from its correlates (Bloom and Gundlach 2001; Forbes 1987; Grcnmo and Olander 1991; Licari 1998; Mitchell, Kutin, and Macgeorge 2000; Qadir 2001), but it makes sense to view consumer well-being more holistically and more dynamically. Knowing that a country's inflation is low, its consumer movement is vibrant and proactive, and its mechanisms for consumer redress are fair, inexpensive, and swift may be as integral to understanding the state of consumers as assessing the average number of calories ingested per day or the number of televisions per capita. In short, an index of consumer well-being should be composed of four components: consumption itself plus market conditions, consumer advocacy, and consumer policy. The consumption component would refer to the "quantity" and "quality" (including safety) of a broad array of products and services. One might, for example, examine consumption in the fourteen categories used by the U.S. Bureau of Labor Statistics (2007). These categories include housing, health care, education, personal insurance and pensions, and, more problematic from a consumer welfare perspective, alcoholic beverages and tobacco products. The second component of an index of consumer well-being would refer to market conditions. Probably the most important market condition is the existence of vigorous competition, for this strongly influences the prices and quality of goods. Competition, in turn, is influenced by a large number of factors, including technological developments and government policies with respect to antitrust and international trade. Another set of market conditions that are directly relevant to consumers consists of those, other than competition, that influence prices. …