The economic theory which explains tourism demand. Initially, the relationship between employment, income, demand for consumer goods and unpaid time is investigated. This provides an explanation of a person’s demand for all consumer goods and services, including tourism.
The choice of how much tourism to purchase relative to other goods and services in then discussed and the analysis is then extended to consider choices between different types of tourism, including the cases where one type of tourism complements or substitutes other types. The effects of changes in income and relative prices on tourism demand are examined and some determinant of the timing of spending are then explained.
Although the theoretical explanation in the first part of the chapter may appear somewhat technical it is crucial in providing a rigorous basis for applied work. Empirical studies which are undertaken without an explicit theoretical underpinning may produce biased results with misleading policy implications for the area concerned. The second part of the chapter departs from the earlier emphasis on the individual by considering the social context of tourism decision-making, showing how insights from the other disciplines can contribute to the economic analysis of tourism.
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