By dividing consumer demands into two parts, direct demand and indirect demand, we can study demand theory in even more layers, hence possibly giving us greater future economic development. The needed addition to demand theory is as follows, consumer demand ought to be reviewed not as a monolithic concept but, rather, as consisting of two parts namely, direct demand and indirect demand, or as it has been termed surrogate demand. Surrogate means, one appointed to act for another. Total demand, therefore, would be equal to direct demand plus surrogate demand. So let's suppose the consumer is going into a local hardware store to purchase some grass seed. As a consumer, he or she is demonstrating direct demand, there is no third party (surrogate) involved in the transaction. On the other hand, when a consumer employs a professional landscaper to re-do his or her lawn, it is the landscaper who then determines the amount and direction of spending. The landscaper becomes the surrogate. There is a large quantity of surrogate-consultants of various kinds: lawyers, interior decorators, architects, financial managers and the like. With advancing technology, the individual consumer must rely more and more on surrogates of one kind or another, with the result that over time the ratio of surrogate to total spending will increase.
The concern in viewing consumer demand in this manner is not with the determinants of consumer choice, but rather the mechanism of spending on the linkage between total spending and its two components. The pricing of goods and services is likewise not in context. The concern is the impact of surrogates on total spending.
Technology apart, surrogate spending, of course, will vary with consumer income, rising as income rises and falling when income declines with lags in between. Demographic changes, as well as education levels, likewise have an impact on the demand for surrogates.
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