Management of household expenditure by using value decomposition technique

Abstract

The aim of the paper is to provide the financial decision making mechanisms used by households for management their expenditure with the mathematical proof enabling quantitative evaluation of purchase alternatives through vector decomposition of the aggregate value of goods and/or services. The match between the properties of goods purchased and the specific consumers’ needs represented by the vector of his preferences is expressed by comparing spatial orientation of the two vectors in “n” dimensional space, where “n” is a number of non-substitute value components important for the consumer. A method for calculation of spatial angle between the vectors is presented for the 3- dimentional space.