ABSTRACT
This chapter discusses the work of two authors who took a consumer approach. To understand and appreciate more fully the contribution of Houthakker, however, it first discusses the work of James Duesenberry and Henri Theil. James Duesenberry is not usually associated with the subject of variable quality, although his reputation is well established in other aspects of consumer theory. He provides a few thoughts regarding the role of quality in 'preference theory or utility theory': These approaches emphasize changes in the quantities of a set of goods. Of importance to our work here, his model introduced additional hypotheses regarding the relationships of consumer income, saving, and the quality of goods and services consumed. During the same period that Chamberlin, Brems, and Abbott were analyzing product differentiation and quality variation within the context of monopolistic competition, Henri Theil began to study the constraint and preference map in consumption space under conditions of variable quality.
