scholarly journals Health shock and preference instability: assessing health-state dependency of willingness-to-pay for corrective eyeglasses

2019 ◽  
Vol 9 (1) ◽  
Author(s):  
Muhammed Nazmul Islam ◽  
Atonu Rabbani ◽  
Malabika Sarker
Keyword(s):  
Consumer Preferences ◽  
Demand Curve ◽  
Consumer Surplus ◽  
Cost Benefit ◽  
Demand Elasticity ◽  
Health State ◽  
Refractive Errors ◽  
State Dependency ◽  
Health Shock ◽  
Matching Techniques

Abstract Background Differences in contingent valuation (CV) estimates for identical healthcare goods can cast considerable doubt on the true economic measures of consumer preferences. Hypothetical nature of CV methods can potentially depend on the salience, context and perceived relevance of the good or service under consideration. Thus, the high demand elasticity for healthcare goods warrants careful selection of study population as the contexts of valuation significantly changes after experiencing health shock. Methods In this study, using triple-bounded dichotomous choice (TBDC) experiments, we test how negative health shock (namely, being diagnosed with refractive errors), can alter preference over a common health good (namely, corrective eyeglasses). We compared elicited WTP of diagnosed patients with a synthetically constructed comparable cohort without the same health shock, controlling for the possible self-selection using a number of matching techniques based on the observable socio-demographic characteristics. Results The consumers diagnosed with vision problems exhibit a rightward shift in their demand curve compared to observationally identical consumers without such problems resulting in about 17% higher consumer surplus. The consumers without the health shock are willing to pay about BDT 762.4 [95% CI: BDT 709.9 - BDT 814.9] for corrective eyeglasses, which gets 15–30% higher for the matched with-health-shock consumers. Multivariable analyses suggest more educated and wealthier individuals are willing to pay respectively BDT 208 and BDT 119 more for corrective eyeglasses. We have tested the models for different matching protocols. Our results are fairly robust to alternate specifications and various matching techniques. Conclusion The preferences for healthcare goods, such as eyeglasses, can significantly depend upon the respondent being diagnosed with refractive errors. Our findings have implications for general cost-benefit analyses often relying on WTP, which can vary depending on the contexts. There are also increasing interests in cost recovery models, which require understanding the demand for healthcare goods and services. We find eliciting the demand needs to consider the health status of the population from which the respondents are sampled.

scholarly journals Consumer surplus and budget constrained preference maximization: A note

2020 ◽  
Vol 21 (1) ◽  
pp. 49
Author(s):  
Somdeb Lahiri
Keyword(s):  
Willingness To Pay ◽  
Cost Benefit Analysis ◽  
Demand Curve ◽  
Consumer Surplus ◽  
Cost Benefit ◽  
Applied Economics ◽  
Happy Ending ◽  
Mba Programs ◽  
Main Text ◽  
Demand Curves

The paper attempts to rectify what appear to be popular but elementary misconceptions about the concept of consumer surplus in the context of Marshallian demand curves. It is primarily addressed to teachers of microeconomics at the undergraduate level or in MBA programs of business schools. The main text informs the reader about the model/context and the results we are concerned with, all of the latter being a comprehensive teaching note, relegated to an appendix of the paper. Thus, the potential instructor may use the main text to motivate himself/herself and at the same time inform his/her students as to the topic i.e. the rehabilitation of consumer surplus as an exact measure of welfare from the stand-point of cost benefit analysis. Thereafter the appendix can be referred to for a more formal presentation. The technical results contained in the appendix begin by showing that willingness to pay is the area under the demand curve if and only if consumers are surplus maximizers. The last result in the appendix is a theoretically ‘happy ending’ since it shows that for purposes of applied economics, budget constrained preference maximization implies surplus maximization and hence for such consumers, willingness to pay is indeed the area under the demand curve up to the quantity consumed.

scholarly journals Demand Analysis of Recreation Visits to Chitral Valley: A Natural Resource Management Perspective

2007 ◽  
Vol 46 (4II) ◽  
pp. 971-984 ◽  
Author(s):  
Muhammad Rafiq ◽  
Shafiqullah .
Keyword(s):  
Resource Management ◽  
Natural Resource Management ◽  
Policy Change ◽  
Social Exchange ◽  
Natural Resource ◽  
Cost Benefit Analysis ◽  
Demand Curve ◽  
Consumer Surplus ◽  
Cost Benefit ◽  
Cultural Economic

Recreational visits are primarily about human activity which involves travel from an originating area to a destination for cultural, economic, and social exchange processes. People travel to exotic locations for sight seeing, picnicking, bird watching, and for cultural and religious settings. However, accessibility to such areas is often free, which not only results in environmental hazards but also deprives the cash destitute government from revenue that such these sites offer. Valuing the recreational benefits associated with a destination based on tourists’ preferences can help formulate an appropriate policy for Natural Resource Management (NRM). Environmental and natural resource management studies often try to measure the welfare change associated with a policy change. Welfare is generally defined as area under the demand curve; accordingly, by estimating the demand curve, consumer surplus is obtained which shows the welfare changes associated with an environmental policy change [Gunatilake (2003)]. The recreational values thus obtained can be utilised for a cost benefit analysis of a policy option, thereby, managing a park or a natural resource on a sustainable basis.

scholarly journals A Welfare Assessment of Revenue Management Systems

2020 ◽  
Vol 19 (1) ◽  
pp. 1-41
Author(s):  
Nicolas Dupuis ◽  
Marc Ivaldi ◽  
Jerome Pouyet
Keyword(s):  
Theoretical Model ◽  
Revenue Management ◽  
Consumer Preferences ◽  
Consumer Surplus ◽  
Capacity Constraints ◽  
Management Systems ◽  
Optimal Pricing ◽  
Pricing Strategies ◽  
Welfare Impact ◽  
Welfare Assessment

AbstractWe study the welfare impact of revenue management, a practice which is widely spread in the transport industry, but whose impact on consumer surplus remains unclear. We develop a theoretical model of revenue management allowing for heterogeneity in product characteristics, capacity constraints, consumer preferences, and probabilities of arrival. We also introduce dynamic competition between revenue managers. We solve this model computationally and recover the optimal pricing strategies. We find that revenue management is generally welfare enhancing as it raises the number of sales.

scholarly journals Usefulness of the concept of social savings and consumer surplus in studies on the impact of innovation on economic growth

2018 ◽  
Vol 2 (4) ◽  
pp. 179
Author(s):  
Janusz Krzysztof Myszczyszyn
Keyword(s):  
Economic Growth ◽  
Design Research ◽  
Consumer Surplus ◽  
Demand Elasticity ◽  
High Price ◽  
Elasticity Of Demand ◽  
The Social ◽  
Alternative Good ◽  
Economic Thinking ◽  
The Impact

Aim: The main objective of the paper was to calculate social savings (and consumer surplus) of innovation on the example of railroads in Germany for 1985. The railways were among the most important innovations in the nineteenth century. Being aware of the limits of the social savings technique, the author included the concept of consumer surplus in his calculation Design / Research methods: For the purpose of the research, the author used the concept of social savings proposed by Robert Fogel and consumer surplus. Conclusions / findings: For the year 1895, social savings amounted to 2.82% (first equation) of GDP and 5.04% of GDP (second equation), taking into account elasticity of demand (-1,38), social savings amounted to 1.27% of GDP and 2.18% of GDP for Germany. The result thus elicited the author referred to the social savings from railroads as made available in literature and the author’s previous research. The author demonstrated that the social savings from the innovation were relatively small. Originality / value of the article: The results of research are useful for examining the impact of innovation, such as railroads, on the level of social savings. The paper fills the gap in the Polish economic thinking on the use of counterfactual methods. Implications of the research: The concept of social savings which takes into account demand elasticity can be applied successfully in evaluating the impact of (various) innovations on economic growth. Limitations of the research: The weakness of the method may be the lack of knowledge about the real level of elasticity of demand for innovation, as well as determining the level of prices of an alternative good, especially if the use of innovation at the initial stage of bringing it to the market involves a relatively high price.

STORE PROMOTION, MANUFACTURER COMPETITION AND WELFARE

2021 ◽  
pp. 1-18
Author(s):  
HAO WANG ◽  
XUNDONG YIN ◽  
ALICE Y. OUYANG
Keyword(s):  
Social Welfare ◽  
Consumer Preferences ◽  
Consumer Surplus ◽  
Weighted Average ◽  
Brand Name ◽  
Price Distortion ◽  
Online Platforms ◽  
Brand Competition ◽  
The Social ◽  
Partial Exclusion

This study evaluates the partial exclusion effects of store promotion. We find that a manufacturer with a better brand name has a higher willingness-to-pay for promotion services offered by retail stores or online platforms. The promotion results in higher sales-weighted average prices (wholesale and retail) and a larger inter-brand price gap. The stores or platforms extract more profits from manufacturers and consumers through the promotion services. The effects on consumer surplus and social welfare depend on whether the promotion alters consumer preferences. If it does, more consumers would be choosing their less-preferred brands because of the larger inter-brand price gap, which would be socially inefficient. If it does not, the promotion may help to correct the price distortion, but the social welfare effect is positive only when the promotion effect is small enough. In both cases, the promotion services reduce the total consumer surplus by softening inter-brand competition.

scholarly journals Sex Differences in Demand for Highly Palatable Foods: Role of the Orexin System

2020 ◽  
Author(s):  
Linnea R Freeman ◽  
Brandon S Bentzley ◽  
Morgan H James ◽  
Gary Aston-Jones
Keyword(s):  
Sex Differences ◽  
Demand Curve ◽  
Female Rats ◽  
Demand Elasticity ◽  
Male Rats ◽  
Neural Activation ◽  
Palatable Food ◽  
Behavioral Economic ◽  
Male And Female Rats

Abstract Background The prevalence of eating disorders, including binge eating disorder, is significantly higher in women. These findings are mirrored by preclinical studies, which indicate that female rats have a higher preference for palatable food and show greater binge-like eating compared with male rats. Methods Here, we describe a novel within-session behavioral-economic paradigm that allows for the simultaneous measurement of the intake at null cost (Q0) and normalized demand elasticity (α) of 3 types of palatable food (low fat, high fat, and chocolate sucrose pellets) via demand curve analysis. In light of evidence that the orexin (hypocretin) system is critically involved in reward and feeding behaviors, we also examined the role of orexin function in sex differences of economic demand for palatable foods. Results The novel within-session behavioral-economic approach revealed that female rats have higher intake (demand) than males for all palatable foods at low cost (normalized to body weight) but no difference in intake at higher prices, indicating sex-dependent differences in the hedonic, but not motivational, aspects of palatable food. Immediately following behavioral-economic testing, we observed more orexin-expressing neurons and Fos expression (measure of recent neural activation) in these neurons in female rats compared with male rats. Moreover, the orexin-1 receptor antagonist SB334867 reduced both low- and high-cost intake for palatable food in both male and female rats. Conclusions These findings provide evidence of higher demand at low prices for palatable food in females and indicate that these behavioral differences may be associated with sexual dimorphism in orexin system function.

The Analysis of Subsidy Policies for Alternative Fuel Vehicles

2011 ◽  
Vol 347-353 ◽  
pp. 3920-3923 ◽  
Author(s):  
Peng Yu Chen ◽  
Chao Heng Tseng ◽  
Yen Kuang Lin ◽  
Yi Hsuan Shih ◽  
Yu Ling Chen
Keyword(s):  
Carbon Tax ◽  
Consumer Preferences ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Alternative Fuel ◽  
Medical Expenditure ◽  
Manufacturing Cost ◽  
Alternative Fuel Vehicles ◽  
Policy Makers ◽  
Criteria Pollutants

The "Air Resource Co-benefits (ARCoB) Model" was developed in this study to integrated the health benefits from the reduction of criteria pollutants (the averted loss of life expectancy and annual medical expenditure) and the ecological benefits from the reduction of greenhouse gases (GHGs) (the averted carbon tax) from the promotion of the alternative fuel vehicles currently on the market. By questionnaire survey, the consumer preferences and willingness to pay for the alternative fuel vehicles in Taipei were analyzed. From cost-benefit analysis, the amount of money would be appropriate for government subsidy and reduction of the manufacturing cost for alternative fuel vehicles were suggested for the policy makers and automobile enterprises in this study. It could be a reliable reference for the subsidies policy.

scholarly journals Tax efficiency in a model of endogenous markups

SERIEs ◽  
2019 ◽  
Vol 10 (3-4) ◽  
pp. 401-418
Author(s):  
Esra Durceylan
Keyword(s):  
Firm Heterogeneity ◽  
Consumer Preferences ◽  
Consumer Surplus ◽  
Consumer Welfare ◽  
Tax Revenue ◽  
Aggregate Productivity ◽  
Ad Valorem Tax ◽  
Unit Taxes ◽  
Efficiency Comparison ◽  
Ad Valorem

Abstract Efficiency comparison of ad valorem and unit taxes has been traditionally based on consumer welfare. However, if the tax instrument also affects the distribution of firms over their productivities, the policy maker may be concerned about the implications on aggregate productivity as well. This paper makes an efficiency comparison of ad valorem and unit taxes by allowing the distribution of firms to respond to changes in policy. First, I make an efficiency comparison in a model with monopolistically competitive firms that are homogenous with respect to their productivity levels. Consumer preferences exhibit love for variety and allow firms to adjust their markups. I find that ad valorem tax is more efficient. Allowing for firm heterogeneity overturns this result at high revenue requirements. As the tax rate increases, ad valorem tax causes excessive exit of firms which makes the market more competitive. Hence, few surviving firms price lower by decreasing their markups. Lower prices decrease the tax revenue collected. As a result under ad valorem tax regime, higher consumer surplus is dominated by lower tax revenue. On the other hand, production is concentrated among relatively more productive firms. Thus, aggregate productivity is higher under ad valorem tax regime.

scholarly journals Economic evaluation on the tourism and recreational values of Can Gio biosphere reserve by adopting the travel cost method

2015 ◽  
Vol 18 (4) ◽  
pp. 153-165
Author(s):  
Hoang Thi Minh Vo ◽  
Thanh Thi Tu Nguyen
Keyword(s):  
Natural Resources ◽  
Demand Curve ◽  
Economic Value ◽  
Consumer Surplus ◽  
Biosphere Reserve ◽  
Travel Cost ◽  
Travel Cost Method ◽  
Total Economic Value ◽  
Tourism Potential ◽  
Can Gio Mangrove

The research aims at estimating the tourism and recreational values of Can Gio Mangrove Biosphere Reserve, Ho Chi Minh City, specifically, assessed the tourism potential via the willingness-to-pays of respondents (including domestic tourists and local people) for sustaining the landscape and regenerating natural resources as well as protecting the environment. The zone travel cost method was adopted in this study, to firstly plot the demand curve and then to estimate the values of recreation for visitors, eventually, come up with the total economic value of natural resources and environment of the research site. The results showed that the total recreational value of this resort is 6,542.3 billion VND while the consumer surplus values that visitors would receive from tourism activities are 1,389 billion VND. Each the tourist is willing to pay 107 thousand VND to improve the quality of tourism services, upgrading the infrastructure, sustaining the environmental quality and protecting the pristine look of the landscape.

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