Marginal Rate Of Substitution Research Articles

The Marginal Rate of Substitution, in Relation with the Win-win-win Papakonstantinidis Model—Lessons from Linear B

The Marginal Rate of Substitution, in Relation with the Win-win-win Papakonstantinidis Model—Lessons from Linear B

Calculating the economic value of non-marginal mortality risk reductions

Benefit–cost analyses in public health typically calculate the benefits of mortality reduction interventions by multiplying the Value of a Statistical Life (VSL) and the expected decrease in fatalities. This procedure approximates the benefits of small mortality changes but is inaccurate for large risk changes because it holds constant the VSL—a marginal rate of substitution. Building on the theoretical framework of the VSL, we derive expressions to calculate the benefits of non-marginal mortality reductions with empirically calibrated compensating variations and illustrate their use.

The Win-Win-Win Papakonstantinidis Model and the Economic MRS: Some Lessons From Linear B

The suggested "win-win-win papakonstantinidis model" (coming from Nash1 win-win extended approach) tries to find ways for the three-pole bargaining conceptual equilibrium, under conditions, thus maximizing expected utilities for all the involved parties AND the Community in local decision-making by applying a combination of Descriptive Behavior (DB), Rational Choice, Instrumental Rationality and the Applied Behavioral Analysis (ABA) methodologies, then an updating community's behavioral state is expected. In the opposite, the Marginal Rate of Substitution - which is analyzed from the view of Political Economy- leads our thoughts into the pure individualism and the need to interpret all the transactions we make and the corresponding decisions through the maximization of our individual satisfaction By this definition the win-win-win papakonstantinidis model2 helps the scientific thought so to understand the "socially acceptable substitution" thus deriving profit from providing the community with the necessary “emotional intelligence” among the people of a self-organizing community, drawing stimuli from distributions made in the Greek area 1450 years BC.

Estimating utility values for non-alcoholic steatohepatitis health states: a discrete choice experiment.

Background: This study estimated utility values for non-alcoholic steatohepatitis (NASH). Previous studies have assumed that health-related quality of life does not vary between the early stages of NASH. Materials & Methods: Discrete choice experiment (DCE) surveys estimated the value of avoiding fibrosis progression. Patients also completed the EQ-5D-5L. Marginal rates of substitution estimated utility change associated with fibrosis progression. Results: DCE surveys were completed by the UK general public (n=520) and patients with NASH (n=154). The utility decline between fibrosis stages F1 and F4 decompensated was between -0.521 to -0.646 (depending on method). Conclusion: Three methods were used to estimate utilities for NASH, each one showed sensitivity to advancing fibrosis, including in the early stages, which is often considered asymptomatic.

The digitalisation, dematerialisation and decarbonisation of the global economy in historical perspective: the relationship between energy and information since 1850

To better understand the processes of digitalisation, dematerialisation and decarbonisation, this paper examines the relationship between energy and information for the global economy since 1850. It presents the long run trends in energy intensity and communication intensity, as a proxy for total information intensity. The evidence suggests that, relative to GDP, global economic production has been reducing energy and increasing information use since 1913. The analysis indicates that it initially required little information to replace energy in production and that the ability to substitute away from energy and towards information has been declining. The result implies that the global economy is now reducing energy and increasing information at a substitution rate of 0.2 kB per kWh of conserved energy or 0.8 GB per tonne of carbon dioxide mitigated. As the price ratio of energy to information is currently higher than this marginal rate of substitution, there are incentives to further substitute information for energy. However, one conclusion is that (without the long run escalation of carbon prices) substitution away from energy and towards information is likely to cease within the next few decades and, beyond that, digitalisation will play a declining role in the decarbonisation process.

Decision-making based on sustainability analysis using GREENSCOPE

Current economic and environmental pressure encourages companies to invest and reform processes in a sustainable way. However, the decision on the best sustainable investment in a given industry may not be as straightforward as given by the independent economic and environmental indicators. Analyzing such indicators for investment in process alternatives is a complex multi-objective decision-making process. Many methods can help solve multi-objective problems, GREENSCOPE suggests using the Addictive Utility Method, which may have some shortcomings. In this work, the Analytic Hierarchy Process and the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) are applied to the indicator scores obtained with the GREENSCOPE methodology. The Analytical Hierarchy Process is applied with Marginal Rate of Substitution, to obtain the priority matrices. MATLAB was used to apply the methods and through an algorithm, to determine the adequate number of indicators to be used. Three cases were studied, namely a biorefinery plant, and two academic case studies on the production of acetaldehyde from ethanol and propylene glycol from glycerol. The two academic cases were modeled in Aspen Plus, to obtain process data, and linked to GREENSCOPE using MATLAB. The methodology was applied to some proposed alternatives where the sustainability improvement of energy integration and material recycling was tested. The new methodology was able to identify the more sustainable case among the alternatives. This methodology based on TOPSIS proved to be the best choice, avoiding the weighting of indicators, and providing an expected analytical decision among alternatives.Graphical abstract

Time and distance matter: Study on the public sentiment during the COVID-19 pandemic in a mega-city

This study examines public sentiment during the COVID-19 pandemic, considering time, space, and the severity of the event, and leverages the marginal rate of substitution (MRS). Based on the context of COVID-19 transmission in a mega-city, we set up a novel theoretical model of public sentiment, showing the time-space substitution effect. Then, using the daily panel data including all the prefecture-level cities in China, empirical results show that the level of public sentiment is positively related to the severity of the event, while it is negatively related to the distance and the length of the period. To make the level of public sentiment equal, 1 km farther from the center of the event will require 0.072 to 0.130 days closer to the starting time on average. We further investigate the relationship between the level of public sentiment and time, which can be better depicted as a reversed U-shape. The original contribution of the piece arises principally around the novel application of the concept of the marginal rate of substitution drawn from neoclassical economics, providing insightful policy implications for pandemic control.

Effect of the COVID-19 pandemic on crowding aversion in public transport and transport mode choice: The case of Santiago, Chile

Mode choice modeling has shown a significant crowding effect over travel time perception. But the recent COVID-19 pandemic and the related sanitary measures have changed perceptions of overcrowding on the mode choice. This study aims to quantify these changes through a hybrid discrete choice model using data collected through a revealed preferences survey applied in two time periods in Santiago, Chile. Although the overcrowding aversion was included in the choice model as a latent variable, that had a significant effect on the mode choice of people only for the set of responses belonging to the first time period, which implies a reduction of the initial pandemic impact. Results also show that women and people younger than 35 years old have higher levels of crowding aversion. By analyzing the disutility generated by each alternative mode, it is determined that the bicycle is preferred over the car for trips of distances less than 4 km. In the same way, for trips of less than 3 km, the walk has a preference over public transport. Regarding the marginal rates of substitution between travel and walking time in public transport, for trips of 30 min with an overcrowding level of 6 pax/m2, women over 35 years are willing to trade 2 min of travel for 1 min of walking. When comparing the rates obtained in a pre-pandemic study, it is obtained that for trips of less than 9 min, people in the pandemic have more preferences for walking over spending time inside public transport.

Job preference of preventive medicine students during the COVID-19 pandemic: a discrete choice experiment survey in Shandong Province, China

BackgroundPublic health workers are a crucial part of the health workforce, particularly during the coronavirus disease (COVID-19) pandemic. They play an important role in achieving universal health coverage and sustainable development goals. Human resources in public health in China are in short supply, their distribution is unequal, and their turnover rate is high. A discrete choice experiment (DCE) was applied to investigate preventive medicine students’ preferred job choice criteria and trends in trade-offs by calculating the marginal rate of substitution between these criteria. This study identified the properties of jobs primarily selected by preventive medicine students and estimated the monetary value of each attribute.MethodsBased on discussions and in-depth interviews with preventive medicine students and a literature review, we developed a DCE that assessed how students’ stated preferences for a certain choice were influenced by several job attributes, including location, salary, bianzhi, career development opportunities, working environment, and workload. We applied this DCE to preventive medicine students in Shandong Province, China, using a brief, structured questionnaire. Conditional logit models were used to estimate the utility of each job’s attributes. Willingness to pay (WTP) was estimated as the ratio of the value of the coefficient of interest to the negative value of the cost attribute.ResultsA total of 307 respondents completed the questionnaire, and 261 passed the internal consistency test. All the attributes were statistically significant. Career development opportunities and work locations were the most important factors for the respondents. Preference heterogeneity existed among respondents, e.g., 3-year medical education college students placed a higher value on jobs with bianzhi compared to 5-year medical education college students. Furthermore, rural students’ WTP for a job located in the county or city is much lower than that of urban students.ConclusionsThe heterogeneity of attributes indicates the complexity of job preferences. Monetary and nonmonetary job characteristics significantly influenced the job preferences of preventive medicine students in China. A more effective policy intervention to attract graduates to work in rural areas should consider both job incentives and the backgrounds of preventive medicine graduates.

On the (Near) Equivalence of Welfarist and Extra-Welfarist Methods to Value Healthcare With Implications for Assessing Equity

ObjectivesWhile welfarist economics (WE) methods rely wholly on individuals' valuations, extra-welfarist (EW) methods seek alternative measures of value. Major reviews of the EW literature conclude that EW studies almost universally replace “utility” with “health” as the maximand. This analysis seeks to understand what conclusions are necessary and sufficient to make EW and WE methods concurrent and discusses implications for measuring social value. MethodsUsing standard WE methods, I demonstrate that EW is equivalent to WE with 2 key restrictions—individuals have constant returns to health in producing utility and health budgets are fixed. Fixing budgets removes a key WE step, determining the marginal rate of substitution between consumption and health, the willingness to pay for health gains. ResultsBecause EW methods equate with WE with these 2 restrictions, I show how formal models to construct aggregated social welfare functions (SWFs) in WE frameworks lead directly to SWF models using EW models of value. I also show that, in fixed-budget health systems, when SWFs place different values for improving health of different subpopulations, aggregate health output fails as a SWF criterion. I demonstrate how different societal values can and should enter EW SWF models using WE criteria. I also discuss the implications when either of these key restrictions does not properly represent people's preferences. ConclusionsOnce EW methods are shown to be a restricted form of WE methods, those WE methods can illuminate how best to measure SWFs in EW environments.

Cross-regional heterogeneity in health and economic outcomes during the COVID-19 pandemic: An analysis of Japan

Health and macroeconomic outcomes varied substantially across prefectures in Japan during the COVID-19 crisis. Using an estimated macro-epidemiological model as well as the idea of revealed preference, we compute the marginal rate of substitution (MRS) and the conditional trade-off curve between health and economic outcomes in each prefecture. We find that there is a large heterogeneity in the MRS as well as the location and shape of the conditional trade-off curve.

Preferences for Adjuvant Immunotherapy in Adults with Resected Stage III Melanoma-A Discrete Choice Experiment.

This study aimed to quantify adult preferences for adjuvant immunotherapy for resected melanoma and the influence of varying levels of key attributes and baseline characteristics. A D-efficient design generated 12 choice tasks for two alternative treatments, adjuvant immunotherapy or no adjuvant immunotherapy. Recruitment to the online discrete choice experiment (DCE) occurred via survey dissemination by eight Australian melanoma consumer and professional groups, targeting adults with resected stage III melanoma, considering or having received adjuvant immunotherapy. The DCE included six attributes with two to three levels each, including 3-year risk of recurrence, mild, permanent and fatal adverse events (AEs), drug regimen and annual out-of-pocket costs. A mixed multinomial logit model was used to estimate preferences and calculate marginal rates of substitution and marginal willingness to pay (mWTP). The DCE was completed by 116 respondents, who chose adjuvant immunotherapy over no adjuvant immunotherapy in 70% of choice tasks. Respondents preferred adjuvant immunotherapy when associated with reduced: probabilities of recurrence, permanent and fatal AEs, and out-of-pocket costs. mWTP for an absolute reduction of 1% in 3-year risk of recurrence was less for respondents with lower rather than higher incomes, AU$794 (US$527) and AU$2190 (US$1454) per year. Respondents accepted an additional 4% chance of a permanent AE to reduce their absolute risk of 3-year recurrence by 1%. Respondents were willing to accept an extra 2% chance of 3-year recurrence to lower their chance of a fatal AE by 1%. Almost three-quarters of respondents chose adjuvant immunotherapy over no adjuvant immunotherapy, preferring treatment that improved efficacy and safety. Findings may inform decisions about access to adjuvant immunotherapy following surgery for melanoma.

The influence of the "cancer" label on perceptions and management decisions for low-grade prostate cancer.

Grade Group 1 (GG1) prostate cancer should be managed with active surveillance (AS). Global uptake of AS remains disappointingly slow and heterogeneous. Removal of cancer labels has been proposed to reduce GG1 overtreatment. We sought to determine the impact of GG1 disease terminology on individual's perceptions and decision making. Discrete choice experiments were conducted on 3 cohorts: healthy men, canonical partners (partners), and patients with GG1 (patients). Participants reported preferences in a series of vignettes with 2 scenarios each, permuting key opinion leader-endorsed descriptors: biopsy (adenocarcinoma, acinar neoplasm, prostatic acinar neoplasm of low malignant potential [PAN-LMP], prostatic acinar neoplasm of uncertain malignant potential), disease (cancer, neoplasm, tumor, growth), management decision (treatment, AS), and recurrence risk (6%, 3%, 1%, <1%). Influence on scenario selection were estimated by conditional logit models and marginal rates of substitution. Two additional validation vignettes with scenarios portraying identical descriptors except the management options were embedded into the discrete choice experiments. Across cohorts (194 healthy men, 159 partners, and 159 patients), noncancer labels PAN-LMP or prostatic acinar neoplasm of uncertain malignant potential and neoplasm, tumor, or growth were favored over adenocarcinoma and cancer (P < .01), respectively. Switching adenocarcinoma and cancer labels to PAN-LMP and growth, respectively, increased AS choice by up to 17%: healthy men (15%, 95% confidence interval [CI] = 10% to 20%, from 76% to 91%, P < .001), partners (17%, 95% CI = 12% to 24%, from 65% to 82%, P < .001), and patients (7%, 95% CI = 4% to 12%, from 75% to 82%, P = .063). The main limitation is the theoretical nature of questions perhaps leading to less realistic choices. "Cancer" labels negatively affect perceptions and decision making regarding GG1. Relabeling (ie, avoiding word "cancer") increases proclivity for AS and would likely improve public health.

A formula for the elasticity of substitution of a large class of smooth utility functions

We derive a general formula for the elasticity of substitution of a large class of smooth utility functions. This formula depends critically on two terms: the marginal rate of substitution and the elasticity of marginal utility, which may be interpreted according to the context either as the coefficient of relative risk aversion or as the intertemporal elasticity of substitution. This formula works for homothetic and non-homothetic utility functions. Besides, it holds for two important class utility functions often used in both empirical and theoretical works: the quasi-linear utility and the Stone-Geary utility functions.

On the properties of the labour wedge: hours worked and government transfers in perspective

ABSTRACT Questions surrounding the labour wedge and the tax wedge in the United States are complicated by the fact that, historically, there is a lack of coherent relationship between the series of hours worked (based on standard measurements) and that of the tax wedge. This has been cited as grounds for discounting the tax wedge as a viable explanation for the behaviour of the labour wedge. In this paper, I explore an alternative measurement of labour hours in the United States in a bid to clear up some of the morass surrounding the tax wedge and hours worked. In the process, I show that, the labour wedge is rather more aligned with available labour hours over the business cycle than it does actual hours worked. Moreover, cyclical properties of the available hours series, however puzzling, are explained by the presence of a government transfer scheme which I introduce in the household side of the market. Also, the presence of the transfer scheme alters the marginal rate of substitution (MRS) between consumption and leisure, and by doing so, reverses the cyclical properties of the tax wedge. This puts the tax wedge in alignment with the labour wedge over the business cycle.

Physician altruism under the change from pure payment system to mixed payment schemes: experimental evidence

BackgroundMixed payment schemes have become one of the effective measures to balance medical costs and quality of medical services. However, altruism as an intrinsic motivation may influence the effect of switching from a pure payment system to mixed payment schemes. This study aimed to quantify physicians’ altruism and analyze the effect of changes of payment system on physicians’ altruism and thus proposed references for the reform of payment system.MethodsWe simulated an exogenous payment system in a controlled laboratory with five experimental groups and 150 medical student subjects. Physicians’ altruism was measured by estimating altruistic parameter and marginal rate of substitution. The non-parametric test and the least square regression analysis were used to analyze the differences of altruistic parameters between pure payment systems and mixed payment schemes. Finally, we analyzed the effect of changes in payment system accompanied by changes in trade-off range on physicians’ altruism.ResultsWe find that the mean value of individual altruistic parameter is 0.78 and the marginal rate of substitution is 1.078. Their estimates at the individual level were significantly positively correlated (Spearman’s ρ = 0.715, p < 0.01). The shift from pure payment system to mixed payment scheme reduced the altruistic parameter. However, the altruistic parameter increased with the increase of the trade-off range. Physicians who were more altruistic generated higher patients’ health benefit. For each unit increase in altruistic parameter, the increase in patients’ health benefit was lower in mixed payment scheme than in the pure payment system.ConclusionThe estimates of altruistic parameters are reliable. Physicians attach a higher weight to patients’ benefit than to their own profit. Mixed payment schemes improve physicians’ behavior and relate to lower altruistic parameters; physicians only need to sacrifice less personal profits to generate the same or even higher altruistic parameter as under the pure payment system. The design of mixed payment schemes that make the interests of physicians and patients close to each other by reducing the trade-off range can provide implication for the reform of payment system in which the physicians’ interest and the patients’ benefit are consistent.

Patient preferences do matter: a discrete choice experiment conducted with breast cancer patients in six European countries, with latent class analysis.

The evolution of breast cancer (BC) treatments has resulted in tailored therapies for the different types and stages of BC. Each treatment has a profile of benefits and adverse effects which are taken into consideration when planning a treatment pathway. This study examines whether patients' preferences are in line with what is considered important from decision makers viewpoint. An online discrete choice experiment was conducted in six European countries (France, Germany, Ireland, Poland, Spain, UK) with BC patients. Six attributes were included: overall survival (OS), hyperglycemia, rash, pain, functional well-being (FWB), and out-of-pocket payment (OOP). Sixteen choice sets with two hypothetical treatments and a "No treatment" option were presented. Data were analyzed with the use of heteroscedastic conditional, mixed logistic, and latent class models. Marginal rate of substitution (MRS) were estimated for OOP versus the rest of attributes to establish the ranking of preferences for each attribute. Two hundred and forty-seven patients with advanced or metastatic BC and 314 with early-stage BC responded. Forty-nine percent of patients were<44 years old and 65 percent had completed university education. The MRS of the analysis demonstrated that "severe pain" is the highest dis-preferred attribute level, followed by "severe impairment in FWB" and OS. Four classes of patients as "decision makers" were identified. This study suggests that there is heterogeneity in treatment preferences of BC patients depending on their sociodemographic and disease-related characteristics. In combination with clinical guidelines, patient preferences can support the selection and tailoring of treatment options.

The Generalized Risk-Adjusted Cost-Effectiveness (GRACE) Model for Measuring the Value of Gains in Health: An Exact Formulation

AbstractThe generalized risk-adjusted cost-effectiveness (GRACE) analysis method modifies standard cost-effectiveness analysis (CEA), the primary method currently used worldwide to value health improvements arising from healthcare interventions. Generalizing standard CEA, GRACE allows for decreasing or even increasing returns to health. Previous presentations of GRACE have relied extensively on Taylor Series expansion methods to specify key model parameters, including those that properly adjust for illness severity and preexisting disability, consequences of uncertain treatment outcomes, and the marginal rate of substitution between life expectancy and health-related quality of life. Standard CEA cannot account for these sources of value or cost in its valuation of medical treatments. However, calculations of GRACE measures based on Taylor Series are approximations, which may be poorly behaved in some contexts. This paper provides a new approach for implementing GRACE, using exact utility functions instead of Taylor Series approximations. While any proper utility function will suffice, we illustrate with three well-known functions: constant relative risk aversion (CRRA) utility; hyperbolic absolute risk aversion (HARA) utility, of which CRRA is a special case; and expo-power (EP) utility, of which constant absolute risk aversion (CARA) is a special case. The analysis then extends from two-period to multiperiod models. We discuss methods to estimate parameters of HARA and EP functions using two different types of data, one from discrete choice experiments and the other from “happiness economics” methods. We conclude with some reflections on how this analysis might affect benefit-cost analysis studies of healthcare interventions.

Monetary Policy, Neutrality, and the Environment

AbstractWe study the interaction between monetary/fiscal policies in a Ramsey–Sidrauski model augmented with the “Green Golden Rule.” We demonstrate conditions whereby monetary and fiscal policy under different utility and preference assumptions are or are not environmentally neutral. Despite its nonseparability in utility, we demonstrate that money is environmentally neutral. Policy impacts the environment via the marginal rate of transformation rather than the marginal rate of substitution between consumption and environment. Fiscal policies under a balanced budget are environmentally nonneutral. Only under a nonbalanced budget, when deficits are monetized, is money environmentally nonneutral. Under cash‐in‐advance and transactions costs, money is environmentally nonneutral.

Consumption Pattern Benefits of the Cultural Activities in South Korea

This study examines the relationship between the cultural consumption pattern and an individual’s subjective well-being. We divide the consumption pattern of cultural activities by frequency, diversity, and inclusion and estimate the monetary value of the participation in culture and arts activities through the marginal rate of substitution. To reduce omitted variable bias, various factors are controlled for, such as basic demographics and satisfaction with personal relationship, class awareness, subjective income level, charitable donations and voluntary activities. The results show that the consumption of cultural activities can improve the individual’s subjective well-being, thus suggesting the use of cultural vouchers. Specifically, we find that the coefficients on frequency are positive and statistically significant, indicating that the cultural activities in Korea have a positive relationship with an individuals’ subjective well-being. Our research provides insight to the government organizations involved in the promotion of leisure policies.