Syllabus: Pearson - Pearson - A Level Economics
Module: 1.2 How Markets Work
Lesson: 1.2.10 Alternative Views of Consumer Behaviour
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Introduction
This lesson aligns with Pearson Edexcel A Level Economics A, Theme 1: Introduction to markets and market failure. Specifically, section 1.2.10 explores alternative views of consumer behaviour, which directly challenges the classical assumption that individuals always make rational choices.
Understanding this content helps students think critically about real-world decision-making, laying essential groundwork for deeper analysis in both microeconomic and behavioural economics contexts. It’s a short section, but it has weight — not just in exams, but in how students see their own choices and those of others.
Key Concepts
From the Pearson Edexcel A Level Economics A Specification, students need to learn:
Irrational decision-making: Traditional economic models assume that consumers aim to maximise utility through rational behaviour. However, real-world decisions often deviate from this.
Three key deviations:
Influence of others: Consumers are often swayed by social norms, peer pressure, or herd behaviour.
Habitual behaviour: Repeated actions, such as daily coffee runs, become automatic, even if suboptimal.
Weakness at computation: Many struggle to accurately compare prices, calculate best deals, or understand long-term consequences (e.g., of payday loans).
These ideas introduce students to the growing field of behavioural economics and begin to blend economics with psychology.
Real-World Relevance
The cost-of-living crisis has put consumer decision-making under the spotlight. Consider:
Buy Now, Pay Later schemes: Despite higher total costs, many consumers choose short-term affordability over long-term value.
Energy switching: Many households fail to switch providers despite potential savings, showing inertia and complexity aversion.
Subscription traps: Services like gyms or streaming platforms benefit from consumers’ habitual behaviour — we forget, or avoid, cancelling.
Discussing these examples helps students connect textbook theory to the world they live in.
How It’s Assessed
This topic appears most often in short or mid-length questions, usually 4–8 marks, sometimes within longer data-response contexts. Common command words include:
Explain: e.g., “Explain why consumers may not act rationally.”
Evaluate: e.g., “Evaluate the usefulness of behavioural economics in understanding consumer decisions.”
Analyse: often with short data extracts illustrating consumer habits or trends.
Encourage students to use examples and structure their answers logically, using definitions and real-world support.
Enterprise Skills Integration
This lesson is a springboard for enterprise thinking:
Decision-making: Students explore why some choices aren’t optimal and learn to spot cognitive biases.
Problem-solving: Analysing behaviour leads to thinking about how products or systems can be designed better (e.g. through “nudges”).
Communication: Explaining consumer behaviour in group tasks helps students practise clarity and persuasion — key enterprise skills.
A simple activity: give students a scenario (e.g. launching a budgeting app) and ask them how they’d address irrational behaviours.
Careers Links
This topic connects to a wide range of pathways:
Behavioural economics: growing demand in finance, public policy, and marketing.
Marketing and advertising: understanding how consumers respond to social cues and habits.
UX and product design: building systems that support better decisions (think Monzo or Headspace).
For careers leads, this lesson supports Gatsby Benchmark 4 (linking curriculum to careers) and Benchmark 5 (encounters with employers or professionals, especially in finance, retail, or design thinking roles).
Teaching Notes
What works well:
Scenarios over lectures: Ask students to reflect on a personal decision (e.g. buying something impulsively). Then link this to theory.
Group discussions: Prompt students to identify common irrational behaviours in advertising or online shopping.
Use behavioural ‘nudges’: Share examples from public health or finance (e.g. automatic pension enrolment) to show applied relevance.
Common pitfalls:
Students often struggle to distinguish between rationality and utility maximisation — be explicit here.
Some may assume irrational means “wrong” — clarify that it’s about predictability, not morality.
Extension idea:
Invite a guest speaker from marketing, finance, or product design to share how consumer psychology shapes their work. Alternatively, task students with analysing the behavioural design of an app they use daily.
