Discretionary Income Research Articles

Luxury fashion brands

Purpose– This paper offers insights into the consumption motives and purchasing behaviour of that market segment in Taiwan against the background of increasing consumption of luxury fashion brands by young female consumers in Asian countries.Design/methodology/approach– Analysis of data collected using face-to-face semi-structured interviews with 23 fashion-conscious females aged 18-32 years was completed and new empirical insights are offered.Findings– The study found a high level of involvement in the world of luxury fashion retailing. Asian consumers devoured media commentary, drew inspiration from female celebrities and treated information-seeking and discussion of luxury fashion brands with friends as a serious and enjoyable pursuit. The social status conferred by expensive fashion wear motivated them to spend on luxury brands even if their discretionary income was limited. Potential guilt in so doing was assuaged by rationalising that the quality was good and the purchase would be long lasting. Marketers targeting this valuable segment should communicate appeals to an aspirational lifestyle in traditional and social media, effective at reaching young women.Originality/value– The study reported in this paper contributes to the limited published research into the luxury-marketing sector in Asia by examining the buying behaviour of female Strawberry Generation consumers in Taiwan. It is the first to research and investigate the meanings attached to luxury by these individuals in the collectivist culture of Taiwan, as well as their motivations, and the factors influencing their purchase of luxury fashions. The study thus contributes with new knowledge to the buying of luxury fashion products by young female Taiwanese consumers, which may be extended to other collectivist cultures in Asia.

Політика розвитку внутрішнього ринку та Угода про асоціацію Україна – ЄС: спільність у суперечність завдань

After 2008, Ukraine's domestic market has been growing slowly compared to other countries and exerted hardly any influence on the development of commodity production sector. The reasons are associated with the fact that consumers, because of the low growth of discretionary income, were slow in changing their consumer spending in favor of innovative and better quality products and manufacturers tended to satisfy the scanty demand for such products with imported items. The slowed structural changes in aggregate demand and aggregate supply in the domestic market led to the following negative economic trends: high income differentiation, which in Ukraine is 2-3 times greater than in the developed world, technological backwardness of the commodity production, where the wear rate of fixed assets reached 76,7%, devaluation of the hryvnya, and inflation. The only way for the Ukrainian Government to expand the domestic market, and use its potential to update and modernize the domestic commodity production is increasing the consumers' purchasing power together with encouraging investment in the sector of commodity production. These issues were not solved with the help of the economic benefits which Ukraine received in 2008 after accessing the WTO. EU - Ukraine Association Agreement gives the Ukrainian Government another chance to succeed in implementing the policy of the growth of domestic market providing it is supplemented by protectionist measures focused on import substitution, increasing the productivity of commodity production, and launching new types of high-tech products.

Loan Loss Provision: Some Empirical Evidence for Italian Banks

This paper uses data from a panel of more than 400 Italian banks for the period 2001 – 2012 to examine the main determinants of loan loss provision (LLP), which are classified as either discretionary (income smoothing, capital management, signalling) or non-discretionary (related to the business cycle). The results suggest that LLP in Italian banks is driven mainly by non-discretionary components, especially during the recession of 2008-2012, and is consistent with a countercyclical behavior of LLP. Further, it is generally less pro–cyclical (although not during the recent economic crisis) in the case of local banks: since their loans are more collateralised, their behaviour is more strongly affected by supervisory activity, their initial coverage ratio being lower than for other banks.

Measuring the Impact of a Conditional Cash Transfer Program on Consumption Behavior with Propensity Scoring

Conditional cash transfer (CCT) programs are quickly replacing old welfare programs because they help the poorest members of society both on the short and long terms. On the short term, the extra discretionary income provided by these programs help participant families meet their pressing basic needs. On the long term, these cash transfers are conditional on participants engaging in health and education-related activities that directly benefit their children, as an attempt to extract the new generation from the vicious circle of poverty. The impact of CCT programs on their main goals (health, education, and nutrition) has already been widely tested and documented. The main purpose of our current study is to assess the impact of a fully implemented program (Bolsa Familia in Brazil) on consumption behavior. This is important for several reasons. First, CCT programs represent a substantial boost in participants’ discretionary income, all funneled into consumption, resulting into a substantial additional demand for certain product categories. Second, critics of CCT programs claim that most of this discretionary income is squandered in superfluous consumption, pushing these poor households into new unsustainable lifestyle. Third, most tests of the impact of CCT programs are based on controlled experiments conducted either before or at the beginning of the program’s full implementation. In contrast, our assessment is done after Bolsa Familia has been fully implemented, which required us to design a natural experiment combining propensity scoring with econometric modeling. Based on this natural experiment, we are able to quantify the effect of Bolsa Familia on its participants and also the incremental demand for various product categories generated by this CCT program. Contrary to what detractors of the program claim, we find that most of the extra cash is devoted to essential goods (food, clothing, etc.) rather than superfluous consumption.

Loan Loss Provision: Some Empirical Evidence for Italian Banks

This paper uses data from a panel of more than 400 Italian banks for the period 2001 – 2012 to examine the main determinants of loan loss provision (LLP), which are classified as either discretionary (income smoothing, capital management, signalling) or non-discretionary (related to the business cycle). The results suggest that LLP in Italian banks is driven mainly by non-discretionary components, especially during the recession of 2008-2012, and is consistent with a countercyclical behavior of LLP. Further, it is generally less pro–cyclical (although not during the recent economic crisis) in the case of local banks: since their loans are more collateralised, their behaviour is more strongly affected by supervisory activity, their initial coverage ratio being lower than for other banks.

Moving Forward on the Medicaid Debate: Lessons from the Oregon Experiment

In 2010, the Patient Protection and Affordable Care Act of 2010 (ACA) (P.L. 111-148) created fundamental changes to the Medicaid program. Historically, Medicaid served people who were poor (with the degree of poverty determined by each state) and who in addition fit into a special category, such as being pregnant, blind, or disabled. The ACA removed the categorical eligibility requirements that left many low-income adults uninsured, and the poverty threshold for eligibility was increased to a standardized 138 percent of the federal poverty level (FPL) (138 percent of FPL includes the 5 percent state discretionary income disregards). Although about half of states had operated some form of Medicaid expansion prior to the ACA, this element of the law was foundational to the overall goal of getting people insured. Medicaid expansions were slated to begin in January 2014, but an unanticipated 2012 decision by the U.S. Supreme Court (National Federation of Independent Business v. Sebelius, 2012) ruled the expansions optional and at the discretion of each state. This change in course reignited long-standing debate concerning the value of the program.

Africa 2020: An Indian Perspective

The African consumer market is expected to grow to more than US$ 400 billion by 2020. Another big driver in this market is Africa is the world's fastest growing population that would account for more than 40% of the population growth by 2030 as per the UN studies. This market is going to have the world's youngest population that is emerging as an optimistic consuming class with an estimated 45 million households being added in the group having discretionary income by 2020. Global investors are also seeing Africa as the next opportunity horizon as six of the world's fastest growing economies in the last decade were from Africa. Entrepreneurs have several incubators all over the African continent. Added to this is the fact that Africa has embraced a lot of technologies quiet readily and quickly. This will hasten international business opportunities in this continent. The mega cities like Cairo, Johannesburg and Lagos are now giving way to the faster growing middleweight cities like Abidjan, Khartoum and Rabat. India's bilateral trade with Africa touched US$ 60 billion that is a 20 fold increase in little over a decade. India has always had a stakeholder interest in Africa's sustained prosperity as seen in the trade that provides a lifeline to African societies. This paper looks at how Indian companies are translating the growth opportunity into action.

Trends in middle class as a driver for strategic marketing

class and the spread of modern mass marketing has long been highlighted (Coleman 1983). The ever-increasing purchasing power of the middle class has stimulated the emergence of a mass-market consumer society (Blumin 1989). Nowadays, understanding the evolution of international strategic marketing in emerging countries calls for studying the middle class there. Formulating ‘profiles’ to describe the middle class in different geographic contexts in order to make comparisons between them is an important part of this process of market representation for strategic marketing. The relation between the emergence of a middle class and marketing involves multiple levels and its study is bound to lead to the creation of theory as well as practical applications. Brands aimed mainly at middle-class members, which represents a major objective of modern worldwide retail distribution. But what is ‘the middle class’? And what are the best parameters on which to base a definition of middle class? On the one hand, it is a segment of the population that has discretionary income at its disposal. So, it is a consuming class whose spending is not oriented solely to subsistence. Moreover, its emergence is quite closely related to urbanization. However, this is just one component of the phenomenon – the tip of the iceberg. The submerged bulk of the iceberg involves its members’ education levels and occupations, and at an even more basic level, their values and expectations. Observing middle class evolution in both advanced and emerging countries today is a fundamental issue in international strategic marketing. The ongoing mega-trends involving the middle class in traditional industrial power economies, as well as the newly developing ones, mirror the processes of globalization. Such trends present a two-faced ‘Janus’ aspect, leading, on the one hand, to the creation of a transnational market with converging purchasing power, but on the other, the simultaneous persistence of many cultural differences. By way of example, although the Chinese midTRENDS IN MIDDLE CLASS AS A DRIVER FOR STRATEGIC MARKETING

Shaping the Image of the Game: Early Professional Baseball and the Sporting Press by R. Terry Furst (review)

Reviewed by: Shaping the Image of the Game: Early Professional Baseball and the Sporting Press by R. Terry Furst Dave Ogden R. Terry Furst. Shaping the Image of the Game: Early Professional Baseball and the Sporting Press. Jefferson nc: McFarland, 2014. 173 pp. Paper, $31.50. R. Terry Furst’s Shaping the Image of the Game: Early Professional Baseball and the Sporting Press provides perspective on the role of newspapers and early baseball publications in forming public perceptions of the professional game. Furst extensively quotes writers from such publications as the New York Herald, the New York Clipper, the Spirit of the Times, the Chicago Times, and Beadle’s Dime Base-Ball Player. In analyzing some of the first reporting on baseball in the midnineteenth century, Furst demonstrates the importance of sportswriters, not only in shaping the image of the game, but also in influencing rule making in baseball and how the game was played. Furst writes, “In the formative years of the baseball public, the press was the only quasi-official source of information about baseball, until the advent of the Baseball Guide in 1860. The semi-structured nature and the changes occurring within organized baseball made it imperative for those interested in baseball to follow the game in the press” (92). Furst quotes other historians in proposing that the bulk of the baseball public in the midnineteenth century was middle-class and upper middle-class. They were the most likely to have had the discretionary time and income to attend games. Furst uses press accounts to describe those early followers, and he draws a distinction between the “baseball public” and the “baseball audience.” The former, he notes, had varied interests in the sport and didn’t necessarily attend baseball games, while the latter attended games and thus were [End Page 127] more interactive with teams and players. Both groups, however, depended on sportswriters to interpret the state of baseball, to set the agenda for the evolution of baseball, and to frame the relationship between the sport and those who followed it. Furst notes that sportswriters often served as boosters for the game in touting the healthful benefits of playing baseball and in describing the sport as an important diversion from an increasingly bureaucratic society and from the dehumanizing effects of the Industrial Age. Some of the earliest reporting on baseball from such writers as Henry Chadwick focused on fledgling baseball clubs, such as the Knickerbockers and the Gothams. Those early reports were often no more than a “crude box score, accompanied by some praiseworthy comments about the effect of the game upon physical fitness and character” (69). By the mid-1860s, writers were commenting on the caliber of play and on individual players. Sportswriters also reflected public concerns as the game became professional. Furst points out early in the book that many in the sports press derided the growth of professional baseball; if baseball was to remain a noble game, players should be performing for sheer enjoyment and not for monetary gain. Some writers lamented the intrusion of “pay-for-play” and longed for the return of “muffin matches,” or games that were played for recreational, not monetary, benefits. Furst notes that as professional baseball grew, some writers turned from championing the game to expressing chagrin about the social ills and unethical behaviors that accompanied the rise of professionalism. Substituting (teams loading their rosters with ringers for a specific game) and revolving (players breaking their contracts with a team to join another team for the remainder of the season) drew sharp criticism from the press. Gambling was an even greater sin, and Furst writes that reporters were quick to reveal their suspicions about teams throwing games to maximize the odds for gamblers and for players who were betting on their own games. “Expressions in the press of these practices,” Furst writes, “ranged from a mild rebuke to stinging denouncements” (99). Furst devotes the last chapter of the book to the issues surrounding the growing practice of compensating players and to the Cincinnati Red Stockings, the first team to admit publicly that all its players were paid. For sports historians and readers who are well acquainted with the history...

College tuition payment and household consumption in Japan

Because tuition payment comprises a large proportion of expenses in households with children in universities, it causes large and clearly predictable changes in discretionary income in predetermined months. This study examines consumption smoothing for those households as an alternative test of the life-cycle/permanent income hypothesis, using the Japanese Family Income and Expenditure Survey. We show that a one yen decrease in discretionary income due to tuition payment is associated with 0.1–0.2 yen decrease in non-tuition spending in the month of tuition payment, showing that those households are not engaged in consumption smoothing.

Landowner interest in multifunctional agroforestry Riparian buffers

Adoption of temperate agroforestry practices generally remains limited despite considerable advances in basic science. This study builds on temperate agroforestry adoption research by empirically testing a statistical model of interest in native fruit and nut tree riparian buffers using technology and agroforestry adoption theory. Data were collected in three watersheds in Virginia’s ridge and valley region and used to test hypothesized predictors of interest in planting these buffers. Confirmatory factor analysis was used to verify independence of underlying latent measures. Multiple linear regression was used to model interest using the Universal Theory of Acceptance and Use of Technology (UTAUT). A second model that added agroforestry-specific predictors from Pattanayak et al. (Agrofor Syst 57:173–186, 2003) to UTAUT was tested and compared with the first. The first model was robust (Adj R 2 = 0.49) but was improved by adding agroforestry specific predictors (Adj R 2 = 0.57). Model generalizability was confirmed using double cross validation and normality indices. Social influence, risk expectancy, planting experience, performance expectancy, parcel size, and the interaction of gender and risk were significant in the final model. In addition, socioeconomic variables were used to characterize landowners according to their level of interest. Respondents with greater interest were newer owners that have higher incomes and are less active in farming. The result implies that future agroforesters may in large part consist of owners that have recently acquired land and manage their property more extensively with higher discretionary income and multiple objectives in mind.

Loan Loss Provisioning Behavior, Income Smoothing and the Role of Banks' Ownership Structure

We empirically examine whether the way a bank might use loan loss provisions to smooth its income is influenced by its ownership concentration and the regulatory environment. Using a panel of European commercial banks, we find evidence that banks with more concentrated ownership use discretionary loan loss provisions to smooth their income. This behavior is less pronounced in countries with stronger supervisory regimes or higher external audit quality. Banks with low levels of ownership concentration do not display such discretionary income smoothing behavior. This suggests the need to improve existing or implement new corporate governance mechanisms.

Bank income smoothing, ownership concentration and the regulatory environment

We empirically examine whether the way a bank might use loan loss provisions to smooth its income is influenced by its ownership concentration and the regulatory environment. Using a panel of European commercial banks, we find evidence that banks with more concentrated ownership use discretionary loan loss provisions to smooth their income. This behavior is less pronounced in countries with stronger supervisory regimes or higher external audit quality. Banks with low levels of ownership concentration do not display such discretionary income smoothing behavior. This suggests the need to improve existing or implement new corporate governance mechanisms.

Measuring the Impact of a Conditional Cash Transfer Program on Consumption Behavior with Propensity Scoring

Conditional Cash Transfer (CCT) programs are quickly replacing old welfare programs because they help the poorest members of society both on the short and long-term. On the short term, the extra discretionary income provided by these programs help participant families meet their pressing basic needs. On the long term, these cash transfers are conditional on participants engaging in health and education-related activities that directly benefit their children, as an attempt to extract the new generation from the vicious circle of poverty.The impact of CCT programs on their main goals (health, education and nutrition) has already been widely tested and documented. The main purpose of our current study is to assess the impact of a fully implemented program (Bolsa-Familia in Brazil) on consumption behavior. This is important for several reasons. First, CCT programs represent a substantial boost in participants' discretionary income, all funneled into consumption, resulting into a substantial additional demand for certain product categories. Second, critics of CCT programs claim that most of this discretionary income is squandered in superfluous consumption, pushing these poor households into new unsustainable lifestyle. Third, most tests of the impact of CCT programs are based on controlled experiments conducted either before or at the beginning of the program's full implementation. In contrast, our assessment is done after Bolsa Familia has been fully implemented, which required us to design a natural experiment combining propensity scoring with econometric modeling. Based on this natural experiment, we are able to quantify the effect of Bolsa Familia on its participants, and also the incremental demand for various product categories generated by this CCT program. Contrary to what detractors of the program claim, we find that most of the extra cash is devoted to essential goods (food, clothing, tec.) rather than superfluous consumption.

Teens and College Students' Purchasing Decision Factors of Denim Jeans In the United States

This study provides insight into current social media influences and purchasing power of the young generation in that the size of both of these demographic groups will impact the apparel companies and retail market for the predictable future Denim apparel companies are aware of the discretionary spending power of the Y and Z Generations. The characteristics of current teens are so similar to college-age individuals in that they have grown up with digital technology and they prefer to communicate via social networking sites. Retailers have utilized these social media platforms in order to capture the attention of the generations. Traditionally marketing campaigns have differentiated between teens and the college-age population. However, the teens actually have larger spending power and more discretionary income. A survey consisted of 32 questions pertaining to Internet media influences, influence of people, and decision factors on decisionmaking related to purchasing selection. A random sampling of 163 females responded to a set of questionnaires. Teens, like college students desire to make their own decisions when they select and purchase denim jeans. Overall 40% of them wanted to make their own decisions when purchasing their jeans, however, a significant number are influenced by their friend's opinions (34%) and the opinions of family members (15%). However, celebrities (10%) had the least influence on their decisions. Teens, like colleges students make decisions based on the same decision factors: fit (63%), cost (23%), brand (10%) and color (2%). The most important factor in determining preference was "fit".

Impact of social-psychiatric services and psychiatric clinics on involuntary admissions

Germany provides a wide range of highly developed mental health care to its citizens. The aim of this study was to identify factors influencing the voluntariness of admissions to psychiatric hospitals. Especially the impact of demographic factors of the region, characteristics of the psychiatric hospitals and characteristics of the psychosocial services was analyzed. A retrospective analysis of hospital admission registers from 13 German adult psychiatric hospitals in 2009 was conducted. Public data on the regional psychiatric accommodation and demographic situation were added. Hospitals were dichotomously divided according to their index of involuntary admissions. Group comparisons were performed between the clinics with low and high involuntary admission indices. Analysis was conducted with clinical, psychiatric provision and demographic data related to inpatients in the Landschaftsverbands Westfalen-Lippe (LWL)-PsychiatryNetwork. Especially the range of services provided by the social-psychiatric services in the region such as number of supervised patients and home visits had an influence on the proportion of involuntary admissions to a psychiatric hospital. Some demographic characteristics of the region such as discretionary income showed further influence. Contrary to our expectations, the characteristics of the individual hospital seem to have no influence on the admission rate. Social-psychiatric services show a preventive impact on involuntary acute psychiatry interventions. Sociodemographic factors and patient variables play a role with regard to the number of involuntary hospitalizations, whereas characteristics of hospitals seemed to play no role.

Nontaxable income and necessary consumption: the Rousseau’s paradox of fiscal egalitarianism

This article compares a tax method featuring flat rates and fixed allowances equal for all taxpayers (Surplus Income Tax Method (SITM) procedure) with a tax method featuring also flat rates and increasing personal allowances (IPAs) to meet the amounts of necessary consumption required by the different living standards (Discretionary Income Tax Method (DITM) procedure). Our results show that the DITM procedure generates an after-tax income distribution less unequal and superior in terms of social welfare. Moreover, the assumption (for comparison purposes) of identical total tax revenues leads to the corollary that the flat tax rate under the DITM is necessarily larger than the one under the SITM; being thus, the former taxmethod is more progressive than the latter. These results imply an obvious paradox considering the commonly accepted principle that basic necessities are the same for everyone (Rousseau, 1755). Based on the results obtained in this article, we have labelled this paradox as the Rousseau’s paradox of fiscal egalitarianism.

Towards a Structured Approach to Reading Historic Cookbooks

Towards a Structured Approach to Reading Historic Cookbooks

Impact of cost of medicines for chronic conditions on low income households in Australia

To determine the cost of medicines for selected chronic illnesses and the proportion of discretionary income this would potentially displace for households with different pharmaceutical subsidy entitlements and incomes. We analysed household income and expenditure data for 9,774 households participating in two Australian surveys in 2009-10. The amount of 'discretionary' income available to households after basic living and health care expenditure was modelled for households with high pharmaceutical subsidies: pensioner and non-pensioner concessional (social security entitlements); and households with general pharmaceutical subsidies and low, middle or high incomes. We calculated the proportion of discretionary income that would be needed for medicines if one household member had diabetes or acute coronary syndrome, or if one member also had two co-existing illnesses (gastro-oesophageal reflux disease and depression, or asthma and osteoarthritis). Pensioner and low income households had little discretionary income after basic living and health care expenditure (AUD$92 and $164/week, respectively). Medicines for the specified illnesses ranged from $11-$42/month for high subsidy households and $34-$186/month for low subsidy households. Costs reduced substantially once patients reached the annual pharmaceutical cap (safety net), prior to which medicine costs would displace the equivalent of 1%-10% of discretionary income for most household types. However, low income households would have to forego the equivalent of between 5%-26% of their discretionary income for between 7 and 9 months of the year before receiving additional subsidies. Prescription medicines for chronic conditions pose a substantial financial burden to many households, particularly those with low incomes and general pharmaceutical subsidies. Policies are needed to minimize the cost burden of prescription medicines, particularly for low-income working households.

Estimating Willingness-to-Pay for health insurance among rural poor in India by reference to Engel's law

Community-Based Health Insurance (CBHI) (a.k.a. micro health insurance) is a contributory health insurance among rural poor in developing countries. As CBHI schemes typically function with no subsidy income, the schemes' expenditures cannot exceed their premium income. A good estimate of Willingness-To-Pay (WTP) among the target population affiliating on a voluntary basis is therefore essential for package design. Previous estimates of WTP reported materially and significantly different WTP levels across locations (even within one state), making it necessity to base estimates on household surveys. This is time-consuming and expensive. This study seeks to identify a coherent anchor for local estimation of WTP without having to rely on household surveys in each CBHI implementation. Using data collected in 2008–2010 among rural poor households in six locations in India (total 7874 households), we found that in all locations WTP expressed as percentage of income decreases with household income. This reminds of Engel's law on food expenditures. We checked several possible anchors: overall income, discretionary income and food expenditures. We compared WTP expressed as percentage of these anchors, by calculating the Coefficient of Variation (for inter-community variation) and Concentration indices (for intra-community variation). The Coefficient of variation was 0.36, 0.43 and 0.50 for WTP as percent of food expenditures, overall income and discretionary income, respectively. In all locations the concentration index for WTP as percentage of food expenditures was the lowest. Thus, food expenditures had the most consistent relationship with WTP within each location and across the six locations. These findings indicate that like food, health insurance is considered a necessity good even by people with very low income and no prior experience with health insurance. We conclude that the level of WTP could be estimated based on each community's food expenditures, and that this information can be obtained everywhere without having to conduct household surveys.