Microeconomic theory predicts that people decrease consumption when price increases, the magnitude of the effect depending on price elasticity. The law of demand, however, implicitly assumes that consumers know prices, an assumption that is not always satisfied in markets with ex post billing. When prices are not transparent, elasticity estimates are potentially lower than their full information potential. Evidence of low price elasticity abounds in residential water demand studies, limiting the effectiveness and desirability of using price signals as a conservation tool. It is hypothesized that resident's sluggish response to price is partly due to the absence of price information on water bills. Differences in the informational content of bills are documented for the first time on the basis of sample bills collected from 383 utilities across the USA. A standard aggregate water demand model is augmented with qualitative variables describing differences in billing information, allowing such variables to affect the intensity with which consumers respond to price signals. No evidence is found that non-price information items affect price elasticity but there is a statistically significant effect in the case of price-related information; in our sample, price elasticity increases by 30% or more when price information is given on the bill.
The desire for male children is prevalent in India, where son preference has been shown to affect fertility behavior and intrahousehold allocation of resources. Economic theory predicts less gender discrimination in wealthier households, but demographers and sociologists have argued that wealth can exacerbate bias in the Indian context. I argue that these apparently conflicting theories can be reconciled and simultaneously tested if one considers that they are based on two different notions of wealth: one related to resource constraints (absolute wealth), and the other to notions of local status (relative wealth). Using cross-sectional data from the 1998-1999 and 2005-2006 National Family and Health Surveys, I construct measures of absolute and relative wealth by using principal components analysis. A series of statistical models of son preference is estimated by using multilevel methods. Results consistently show that higher absolute wealth is strongly associated with lower son preference, and the effect is 20%-40% stronger when the household's community-specific wealth score is included in the regression. Coefficients on relative wealth are positive and significant although lower in magnitude. Results are robust to using different samples, alternative groupings of households in local areas, different estimation methods, and alternative dependent variables.
This paper presents the economic rationale for treating Common Goods for Health (CGH) as priorities for public intervention. We use the concept of market failure as a central argument for identifying CGH and apply cost-effectiveness analysis (CEA) as a normative tool to prioritize CGH interventions in public finance decisions. We show that CGH are consistent with traditional lists of public health core functions but cannot be identified separately from non-CGH activities in such lists. We propose a public finance decision tree, adapted from existing health economics tools, to identify CGH activities within the set of cost-effective interventions for the health sector. We test the framework by applying it to the 2018 Disease Control Priority (DCP) list of interventions recommended for public funding and find that less than 10% of costeffective interventions unconditionally qualify as CGH, while another two-thirds may or may not qualify depending on context and form. We conclude that while CEA can be used as a tool to prioritize CGH, the scarcity of such analyses for CGH interventions may be partly responsible for the lack of priority given to them. We encourage further research to address methodological and resource challenges to assessing the cost-effectiveness of CGH intervention packages, in particular those involving large investments and longterm benefits.
As countries progress towards universal health coverage (UHC), they frequently develop explicit packages of health services compatible with UHC goals. As part of the Disease Control Initiative 3 Country Translation project, a systematic survey instrument was developed and used to review the experience of five low-income and lower-middle-income countries—Afghanistan, Ethiopia, Pakistan, Somalia and Sudan—in estimating the cost of their proposed packages. The paper highlights the main results of the survey, providing information about how costing exercises were conducted and used and what country teams perceived to be the main challenges. Key messages are identified to facilitate similar exercises and improve their usefulness. Critical challenges to be addressed include inconsistent application of costing methods, measurement errors and data reliability issues, the lack of adequate capacity building, and the lack of integration between costing and budgeting. The paper formulates four recommendations to address these challenges: (1) developing more systematic guidance and standard ways to implement costing methodologies, particularly regarding the treatment of health systems-related common costs, (2) acknowledging ranges of uncertainty of costing results and integrating sensitivity analysis, (3) building long-term capacity at the local level and institutionalising the costing process in order to improve both reliability and policy relevance, and (4) closely linking costing exercises to public budgeting.
In areas subject to drought and/or high population growth, measures to encourage conservation have become an important part of water management and planning. Residential consumers' low sensitivity to prices reduces the effectiveness and desirability of using price signals as a conservation tool. We hypothesize that consumers' sluggish response to prices is partly due to the fact that price information is not conveniently available to them. If the hypothesis is true, including clear price information on water bills should reinforce consumers' sensitivity to price and therefore increase the power of price-based policies in demand management strategies. A standard aggregate water demand model is augmented with qualitative variables describing the informational content of bills and estimated using a cross section of US utilities. Our results indicate that a utility that spells out unit prices on the water bill can achieve the same level of conservation as others with a thirty to forty percent lower rate increase. We find no evidence that non-price information such as history of use or conservation messages has a significant effect on demand.
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