Syllabus: Pearson - AS Level Economics
Module: 1.2 How Markets Work
Lesson: 1.2.10 Alternative Views of Consumer Behaviour
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Introduction
This topic appears in the Pearson Edexcel AS Level Economics A specification, under Theme 1: Introduction to Markets and Market Failure. It moves beyond the simplified assumption that consumers always make rational choices, and instead explores the alternative influences on consumer behaviour.
By tackling these ideas, students can better understand real economic behaviours, providing depth to their exam responses and making space for stronger application and evaluation. For teachers, this topic is an opportunity to spark rich discussion and tie economics to psychology, habits, and real decision-making.
Key Concepts
According to the Pearson Edexcel AS Level specification, students should explore:
The limits of rational behaviour: Challenging the idea that consumers always act in ways that maximise their utility.
Behavioural influences, including:
Social norms and peer behaviour: The tendency to follow what others are doing, regardless of personal benefit.
Habitual behaviour: Repeated choices made out of habit rather than rational consideration.
Weakness at computation: Difficulty in calculating and comparing costs, benefits or probabilities.
These points ask students to consider real-life consumer decisions that deviate from traditional economic models. It’s about bridging textbook theory with human behaviour.
Real-World Relevance
These behavioural insights can be seen all around us:
Subscription traps: Many people keep paying for services they no longer use, like gym memberships, because of habitual inertia.
Influencer marketing: Consumers may purchase products not because of price or utility, but due to social proof—what peers or online figures promote.
Pay Later schemes: Offers like Klarna or Afterpay target consumers’ weak computation skills, underestimating the cost of splitting payments or accruing debt.
By exploring examples like these, students develop more nuanced understandings of how real markets work—and sometimes fail.
How It’s Assessed
This content is typically assessed in Paper 1 (Markets and Market Failure), where students need to apply behavioural insights within short-answer or extended evaluation questions.
Command words to expect:
Explain: Describe the behavioural bias and how it impacts decision making.
Analyse: Explore the implications of irrational behaviour on market outcomes.
Evaluate: Weigh up how significant these factors are compared to rational models.
Common question formats include:
“Explain one reason why consumers may not behave rationally.”
“Evaluate the impact of behavioural biases on market efficiency.”
Students should be encouraged to draw simple diagrams where appropriate but focus on clear written analysis and evaluation.
Enterprise Skills Integration
This topic is a natural fit for building key enterprise skills:
Problem solving: Understanding and addressing the mismatch between traditional models and real consumer actions.
Decision making: Evaluating how businesses might adjust strategies to respond to irrational consumer habits.
Critical thinking: Challenging established assumptions about how individuals behave in economic contexts.
Try posing classroom tasks like: “Design a product or pricing strategy that takes advantage of habitual behaviour”, or “Evaluate the ethics of targeting consumer biases in advertising.”
Careers Links
This topic connects strongly to careers in:
Marketing and Advertising: Understanding behavioural tendencies is essential for designing campaigns and pricing strategies.
Behavioural Economics and Public Policy: Applying psychological insights to shape nudges and interventions (e.g. pension opt-ins, sugar taxes).
Retail Management: Using consumer data to respond to patterns and maximise sales.
This aligns well with Gatsby Benchmarks 4 (linking curriculum learning to careers) and 5 (encounters with employers), especially when paired with employer talks or case studies.
Teaching Notes
Tips for effective delivery:
Use everyday examples to ground theory in lived experience. Food choices, social media use, and spending habits all work well.
Incorporate student surveys or mini experiments—e.g. choices under time pressure, brand preferences—to generate discussion.
Link back to rational models of decision-making, so students can compare and contrast.
Common pitfalls to watch for:
Oversimplifying behaviour as “irrational” without exploring underlying factors.
Treating behavioural economics as an add-on rather than a valid critique of classical theory.
Extension activities:
Debate: “Should firms be allowed to exploit consumer weaknesses?”
Research task: Analyse a business that successfully uses behavioural insights (e.g. Netflix, Amazon, fast fashion brands).
