After a detailed discussion of both the approaches of consumer
behaviour, we are in a positon to present some comparative view. In this context,
first we present the criticism of classical and superiority of neoclassical
approach.
CRITICISM OF CLASSICAL OR MARSHALLIAN APPROACH
1.
Utility is not measureable
The proponents of cardinal utility are of the view that whatsoever
satisfaction a consumer derives from any commodity can be measured into
numbers─ known as utils. Moreover utilities can be added etc. but Hicks the
pioneer of ordinal approach rejects such propositions, He and the other
neoclassicals are of the opinion that utility is a subjective phenomenon. Moreover,
a consumer does not possess any “utilometer “to measure the satisfaction. This
is the reason they think that utility can be ranked i.e,m which combinations of
two goods give a consumer equal, more or less satisfaction. Accordingly, the
method of ranking the utility seem to be more plausible then measuring it.
2.
MU of money is not constant
The classical approach to consumer’s equilibrium rests upon the
assumption of constancy of MU of money This is the reason that Marshallian
demand approach fails to distinguish between the two components of PE i.e; SE
and IE. While in the ordinal approach, not only SE of price fall but IE of
price fall is also considered. When IE of price change is included, it means
that because of fall in price of good consumer’s real income has increased. As a
result, he will be able to purchase more of cheaper good. Accordingly, in such
situation MU of money will not remain constant.
3.
Utility is not independently determined
According to utility approach utility depends upon the units of one
good only and it is determined independently i.e, no other good has to be
combined to get the utility. As U = f(Q). However in reality of life, it is
not-so. Because so many goods which are purchased by the consumer are demanded
jointly. Such goods are called complementary goods. In such situation utility depends
upon two goods ie, U= f(x,y).
4.
Demand theory with less Assumptions
With classical approach when the theory of demand is constructed,
we have to make a lot of restrictions like constancy of taste of the consumer
and constancy of price of substitutes etc. in such situation, the classical
theory of demand remained handicapped.
On the other hand, it is the IC approach
which opened a lot of channels for the development of demand theory. Not only
the negative sloped demand curve for a normal good is derived with indifference
curves with less assumptions but the positive sloped demand curve for a giffen
good can also-be derived’ with the help of indifference’-curve.
CRITICISM OF INDIFFERENCE CURVE APPROACH
1.
The Old Wine in a New Floggen
According to D.H. Robertson the ordinal approach is just like an
old wine in a new bottle. As in IC approach the same old concepts have been presented
with new names. As against utility, the concept of IC; rather 1, 2, 3, 4, the
Ist, 2nd , 3rd , 4th like numbers; instead of
MU, the concept of MRS and against DMU, the theory of DMRS have been presented.
2.
Marshallian Base
Prof. Armstrong is of the view that it is not possible to comprehend
the concept of MRS without the knowledge of DMU. He says why MRS diminishes along
an IC? Is it not due to the operation of law of DMU? This shows that 'Hicks' is
not independent in deriving his theory.
3.
Out of─Frying-Pan into the Fire’
The cardinal utility approach is objected on the ground of “Non
measurement of satisfaction”. But how far the concept of ranking the utility is
feasible when we come across that a consumer keeps a lot of bundles of two
goods which yield him equal, more or less satisfaction.
4.
Ridiculous Combinations
An IC can show even those combinations of two goods which are
ridiculous. For example, if we show a combination of 6 shirts and 2 pairs of
shoes, it is desirable one. On other hand, if we plot a bundle of 8 pairs of
shoes and 1shirt, it will be an awkward one.
5.
Two Goods Model
The IC approach is confined to two goods only. But in real life a
consumer does not purchase only two goods. If we have to presents consumer’s
equilibrium in the situation of three goods─three dimensional diagram will be
required which is difficult to handle. While in case of four goods we will not
be able to plot a curve.
6.
No Role of Demonstration Effect
Now a days consumer make their purchases on the basis of fashions,
advertisements and life standards of the rich persons (domestic and foreign)
etc. but IC approach does not incorporate such like influences.
7.
Lacks Empirical Data
The validity of any theory rests upon the supportive data. Unluckily
the IC approach just represents a common behavior of a consumer. It is not
furnished with any statistical research etc.