Why do consumers purchase goods and services in the informal economy?

What is it about?

To evaluate critically the dominant discourse that consumers acquiring goods and services in the informal economy are rational economic actors seeking a lower price, the results of a 2007 Eurobarometer survey involving 26,659 face-to-face interviews in 27 European Union member states are reported.

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Why is it important?

The finding is that achieving a lower price is the sole motive for just 44 per cent of informal economy purchases, one of several rationales in 28 per cent of transactions and not cited as a rationale in 28 per cent of acquisitions. Consumers also use the informal economy to circumvent the shortcomings of the formal economy in terms of the availability, speed and quality of goods and services provision, as well as for social and redistributive reasons, with multilevel mixed-effects logit regression analysis revealing how the prevalence of these rationales significantly vary across populations.

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