Non-monetary Costs Research Articles

A shaky business: Natural gas extraction, earthquakes and house prices

The production of natural gas is strongly increasing around the world. Long-run negative external effects of extraction are understudied and often ignored in (social) cost-benefit analyses. One important example is that natural gas extraction leads to soil subsidence and subsequent induced earthquakes that may occur only after a couple of decades. We show that induced earthquakes that are noticeable to residents generate substantial non-monetary economic effects, as measured by their effects on house prices, also when house owners are fully compensated for damage to their houses. To address the issue that earthquakes do not occur randomly over space, we use temporal variation in the occurrence of noticeable earthquakes while controlling for the occurrence of earthquakes that cannot be felt by house owners. We find that earthquakes that are noticeable with peak ground velocities of above half a cm/s lead to price decreases of 1.9 percent. The total non-monetary costs of induced earthquakes for Groningen are about €170 million (about €600 per household). These results indicate that the non-monetary costs are in the same order of magnitude as the monetary damage costs.

Willingness to Be Financially Informed and the Benefits of Nudging Investors to Do So

Bhattacharya et al. (2012) shows that many investors are reluctant to accept and follow financial advice. This study analyzes three possibilities which could cause this misbehavior: non-monetary costs, willingness to become informed and comprehensibility of financial information. As so many investors do not accept financial advice, the study further analyzes if it is beneficial to nudge investors to do what is good for them (i.e. a risk profiling task). In order to improve the comprehensibility of financial information, the study further tests if different kinds of investors prefer different kinds of risk description formats. The results show that non-monetary costs and the comprehensibility of financial information are not the reasons why so many investors are reluctant to become informed investors. Moreover, nudging investors to do what is good for them is especially beneficial for investors who are intrinsically insufficiently motivated to become informed and who are financially unexperienced. Last but not least, the data clearly shows that different kinds of investors prefer different kinds of risk description formats.

Over-the-Counter Access to Oral Contraception: Reproductive Autonomy on Pharmacy Shelves or a Political Trojan Horse?

Abstract During the fall of 2014, in what seemed like a change of heart, Republican congressional candidates began calling for a policy that reproductive rights advocates have supported for years. Over-the-counter (OTC) oral contraception (OC) became these candidates ' way to connect with the women alienated by the Republican Party in recent elections. They emphasized how OTC access would allow women themselves, not employers or the government, to have control over contraceptive decisions. Liberals responded that this new effort was just a Trojan horse--legalizing OTC access would not only increase the actual price tag on OC, but it would also remove OC from the Patient Protection and Affordable Care Act's extended insurance coverage of contraception. Additionally, reproductive rights advocates noted that it is the Food and Drug Administration (FDA ), not Congress, that legalizes OTC drugs, and the FDA has not received any applications from drug manufacturers who want to sell OC OTC. In reality, both sides have something of a valid argument. OTC OC would be an important step toward reproductive autonomy for American women. It is also correct, however, that an immediate liberalization of OTC presents several issues, economically, politically, and culturally. Despite these valid critiques, OTC access for OC is a change that is worth the time and effort to move past politics and get it right, for many reasons. Requiring insurance companies and Medicaid to reimburse women for OTC OC purchases is a step toward establishing an accessible market and ensuring corresponding reproductive autonomy for women in the United States, which should accompany legalization of OTC OC. INTRODUCTION In 2014, Americans spent a lot of time, energy, and money arguing about oral contraception (OC or control pills)--specifically, who should pay for it. Yet, the public debate surrounding whether employer-sponsored insurance plans should cover OC was mostly unproductive as far as advancing women's reproductive autonomy is concerned. That is because the current United States prescription-only access system for birth control pills fails to serve the needs of the women who stand to gain the most from access to OC. The employer mandate debate only took us further away from realizing a system that would promote access for all women--that is, legalizing an over-the-counter (OTC) Food and Drug Administration (FDA) designation for OC instead of limiting it to prescription-only status. Despite the seemingly groundbreaking contraceptive mandate in the Patient Protection and Affordable Care Act of 2010 (ACA), which transferred responsibility for the monetary cost of OC from women to their insurance companies, (1) all women's access to OC did not improve, nor was the controversy surrounding it reduced. The ACA's provision that insurers have to now pay for OC was intensely contentious among the American public, and the Supreme Court ruled in 2014 that employers with a religious objection to contraception do not have to comply with the ACA's employer mandate. (2) This controversy took attention away from the fact that, notwithstanding the obvious benefits of reducing the price of reproductive planning for women with employer insurance plans, the contraceptive mandate fails to help large segments of women, some of whom stand to benefit most from increased access to OC--specifically women who are unemployed, work part time, are undocumented, or are still on their parents' health insurance (3)--and fails to address the problematic nonmonetary costs of the prescription access system. OTC access would address these issues. With the approval of the American College of Obstetricians and Gynecologists, (4) OTC access is a safe proposal from a public health perspective and one that women want. (5) This Note argues that legalizing OTC access is safe, desirable, and furthers women's autonomy over reproductive decisions. …

Are the Non-Monetary Costs of Energy Efficiency Investments Large? Understanding Low Take-up of a Free Energy Efficiency Program

We document very low take-up of an energy efficiency program that is widely believed to be privately beneficial. Program participants receive a substantial home “weatherization” retrofit; all installation and equipment costs are covered by the program. Less than 1 percent of presumptively eligible households take up the program in the control group. This rate increased only modestly after we took extraordinary efforts to inform households—via multiple channels–about the sizable benefits and zero monetary costs. These findings are consistent with high non-monetary costs associated with program participation and/or energy efficiency investments.

Employees as Active Consumers of HRM: Linking Employees’ HRM Competences with Their Perceptions of HRM Service Value

Recognizing the importance for companies of having high-quality employment relationships with employees, previous studies have sought to explain the variability in employees’ perceptions of HRM service value. However, most of these studies view employees as inactive in employment relationships and, therefore, do not consider whether employees’ own attributes affect their perceptions of HRM service value. In accepting the alternative notion that consumers create value “in use,” the current study regards employees as active consumers of HRM practices, and so examines the extent and way in which employees’ HRM competences (i.e., knowledge, skills, and abilities) explain the variability in HRM service value. Based on data collected from 2,002 employees in 19 companies in the Netherlands, a positive relationship has been found between employees’ HRM competences and their perception of HRM service value, albeit one that is mediated by the perceived quality and nonmonetary costs of HRM services. The main implication of our findings is that employees should be seen as active agents in employment relationships who, through coproducing and consuming HRM services as well as leveraging their knowledge and skills, influence the value of HRM services and have the potential to increase or undermine the outcomes of the employment relationship

Stockpiling Points in Linear Loyalty Programs

Customers often stockpile reward points in linear loyalty programs (i.e., programs that do not explicitly reward stockpiling) despite several economic incentives against it (e.g., the time value of money). The authors develop a mathematical model of redemption choice that unites three explanations for why customers seem to be motivated to stockpile on their own, even though the retailer does not reward them for doing so. These motivations are economic (the value of forgone points), cognitive (nonmonetary transaction costs), and psychological (customers value points differently than cash). The authors capture the psychological motivation by allowing customers to book cash and point transactions in separate mental accounts. They estimate the model on data from an international retailer using Markov chain Monte Carlo methods and accurately forecast redemptions during an 11-month out-of-sample period. The results indicate substantial heterogeneity in how customers are motivated to redeem and suggest that the behavior in the data is driven mostly by cognitive and psychological incentives.

Are the Non-Monetary Costs of Energy Efficiency Investments Large? Understanding Low Take-Up of a Free Energy Efficiency Program

This paper finds striking evidence that individuals and households bypass opportunities to improve energy efficiency that require zero out-of-pocket expenditures and are widely believed to be privately beneficial. We report results from a large-scale randomized controlled trial that significantly reduced barriers to participation in the Federal Weatherization Assistance Program (WAP). This program, the largest residential energy efficiency program in the country, aims to reduce the energy burden of low-income Americans by installing energy efficiency measures in their homes. Since the program’s inception in 1976, more than 7 million households have received weatherization assistance. Related work (Fowlie, Greenstone, and Wolfram 2015) finds that participation in this program significantly reduces energy consumption—and associated energy expenditures— among participating households. 1 These sizeable

Willingness to Pay to Reduce White-Collar and Corporate Crime

Consumer protection and financial regulatory agencies such as the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), and the Consumer Financial Protection Bureau (CFPB) regulate various types of consumer, investor and financial frauds. Whether required or not, rulemaking proceedings oftentimes include some form of benefit-cost analysis. Thus, the benefits of proposed regulations – whether fully quantified or not – are an increasingly important component of rulemaking decisions. Anecdotal evidence suggests that the impact on victims in some cases includes significant time and financial hardships and even pain, suffering, and reduced quality of life. Further, the existence of these offenses causes nonvictims to take costly precautionary behavior and might even inhibit legitimate business activities. Yet, little is known about the true costs of consumer and financial crimes other than the out-of-pocket monetary losses incurred by victims. To the extent society wishes to optimally deter such crimes, without better data on nonmonetary costs, any benefit-cost analyses of criminal justice or prevention programs designed to reduce these crimes will inevitably underestimate program benefits. This paper provides an initial framework and empirical estimates of the willingness to pay (WTP) to reduce four types of white-collar and corporate offenses – consumer fraud, financial fraud, corporate crime, and corporate financial crime. Utilizing a contingent valuation survey approach that has been used to estimate the cost of street crimes, the average WTP for a 10% reduction in each of these four offenses is estimated to range between $35 and $85 per household. In the case of consumer fraud and financial fraud, where estimates of prevalence are available, this translates into a WTP of $1200 per consumer fraud and $12,000 for financial fraud. In contrast, the out-of-pocket costs to victims of consumer fraud have been estimated to average about $100, and about $200 to $250 for various types of financial frauds. These figures also compare favorably to the WTP for a reduced household burglary of $19,000.

Cultural Biases in Migration: Estimating Non-Monetary Migration Costs

Cultural Biases in Migration: Estimating Non-Monetary Migration Costs

A one health framework for the evaluation of rabies control programmes: a case study from Colombo City, Sri Lanka.

BackgroundOne Health addresses complex challenges to promote the health of all species and the environment by integrating relevant sciences at systems level. Its application to zoonotic diseases is recommended, but few coherent frameworks exist that combine approaches from multiple disciplines. Rabies requires an interdisciplinary approach for effective and efficient management.Methodology/Principal FindingsA framework is proposed to assess the value of rabies interventions holistically. The economic assessment compares additional monetary and non-monetary costs and benefits of an intervention taking into account epidemiological, animal welfare, societal impact and cost data. It is complemented by an ethical assessment. The framework is applied to Colombo City, Sri Lanka, where modified dog rabies intervention measures were implemented in 2007. The two options included for analysis were the control measures in place until 2006 (“baseline scenario”) and the new comprehensive intervention measures (“intervention”) for a four-year duration. Differences in control cost; monetary human health costs after exposure; Disability-Adjusted Life Years (DALYs) lost due to human rabies deaths and the psychological burden following a bite; negative impact on animal welfare; epidemiological indicators; social acceptance of dogs; and ethical considerations were estimated using a mixed method approach including primary and secondary data. Over the four years analysed, the intervention cost US $1.03 million more than the baseline scenario in 2011 prices (adjusted for inflation) and caused a reduction in dog rabies cases; 738 DALYs averted; an increase in acceptability among non-dog owners; a perception of positive changes in society including a decrease in the number of roaming dogs; and a net reduction in the impact on animal welfare from intermediate-high to low-intermediate.ConclusionsThe findings illustrate the multiple outcomes relevant to stakeholders and allow greater understanding of the value of the implemented rabies control measures, thereby providing a solid foundation for informed decision-making and sustainable control.

Can Protection Motivation Theory predict pro-environmental behavior? Explaining the adoption of electric vehicles in the Netherlands

Scholars have proposed that the Protection Motivation Theory provides a valuable framework to explain pro-environmental choices, by employing a wide set of predictors, such as the costs and benefits of current (maladaptive) behavior as well as prospective adaptive behavior. However, no comprehensive empirical tests of the Protection Motivation Theory in the slow onset environmental risk domain have been published yet to our knowledge. This paper aims at closing this gap. We first conceptualized the Protection Motivation Theory for the use in this environmental domain. Next, we present results of a questionnaire study among a large representative sample of Dutch drivers that showed that the Protection Motivation Theory is a relevant theory for modeling different indicators of full electric vehicle adoption. Notably, all theoretical antecedents proved to be significant predictors of different adoption indicators. Respondents were particularly more likely to adopt an electric vehicle when they perceived the negative consequences caused by conventional vehicles as more severe, and when they expected electric vehicles to decrease these consequences. The most important barriers for electric vehicle adoption were perceived high monetary and non-monetary costs of electric vehicles, and benefits associated with the use of a conventional vehicle. Interestingly, we found that environmental risks are more prominent in predicting close adoption indicators; while energy security risks are more prominent in predicting distant adoption indicators. As expected, our findings suggest that both collective concerns and individual concerns predict different indicators of adoption. Individual concerns (in particular perceived costs of driving an electric vehicle) played a more prominent role when predicting close measures of adoption, while collective concerns (e.g., perceived severity of environmental and energy security risks) played a somewhat more prominent role when predicting distant measures of adoption. Implications for research and practice are provided.

Latent Redemption Thresholds in Linear Loyalty Programs

Customers often stockpile reward points in linear loyalty programs (i.e., programs that do not reward stockpiling) despite several economic incentives against it (e.g., the time value of money). We develop a mathematical model of redemption choice that unites three explanations for why customers seem to be motivated to stockpile on their own, even though the retailer does not reward them whatsoever for doing so. These motivations are economic (the value of foregone points), cognitive (non-monetary transaction costs), and psychological (customers value points differently than cash). The psychological motivation is captured by allowing customers to book cash and point transactions in separate mental accounts. The model is estimated on data from an international retailer using Markov Chain Monte Carlo methods and is shown to accurately forecast redemptions during an 11-month out-of-sample period. The results indicate substantial heterogeneity in how customers are motivated to redeem, and suggest that the behavior in our data is driven mostly by cognitive and psychological incentives.

Willingness to Pay to Reduce White Collar and Corporate Crime

Consumer protection and financial regulatory agencies such as the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), and the Consumer Financial Protection Bureau (CFPB) regulate various types of consumer, investor and financial frauds. Whether required or not, rulemaking proceedings oftentimes include some form of cost-benefit analysis. Thus, the benefits of proposed regulations – whether fully quantified or not – are an increasingly important component of rulemaking decisions. Anecdotal evidence suggests that the impact on victims in some cases include significant time and financial hardships and even pain, suffering and reduced quality of life. Further, the existence of these offenses causes non-victims to take costly precautionary behavior and might even inhibit legitimate business activities. Yet, little is known about the true costs of consumer and financial crimes other than the out-of-pocket monetary losses incurred by victims. To the extent society wishes to optimally deter such crimes, without better data on nonmonetary costs, any cost-benefit analyses of criminal justice or prevention programs designed to reduce these crimes will inevitably underestimate program benefits. This paper provides an initial framework and empirical estimates of the willingness-to-pay to reduce four types of white collar and corporate offenses – consumer fraud, financial fraud, corporate crime and corporate financial crime. Utilizing a contingent valuation survey approached that has been used to estimate the cost of street crimes, the average willingness to pay for a 10% reduction in each of these four offenses is estimated to range between $35 and $85 per household. In the case of consumer fraud and financial fraud – where estimates of prevalence are available, this translates into a willingness to pay of $1,200 per consumer fraud and $12,000 for financial fraud. In contrast, the out-of-pocket costs to victims of consumer fraud have been estimated to average about $100, and about $200 to $250 for various types of financial frauds. These figures also compare favorably to the willingness to pay for a reduced household burglary of $19,000.

Assessing the economic burden of illness for tuberculosis patients in Benin: determinants and consequences of catastrophic health expenditures and inequities.

To inform policy-making, we measured the risk, causes and consequences of catastrophic expenditures for tuberculosis and investigated potential inequities. Between August 2008 and February 2009, a cross-sectional study was conducted among all (245) smear-positive pulmonary tuberculosis patients of six health districts from southern Benin. A standardised survey questionnaire covered the period of time elapsing from onset of tuberculosis symptoms to completion of treatment. Total direct cost exceeding the conventional 10% threshold of annual income was defined as catastrophic and used as principal outcome in a multivariable logistic regression. A sensitivity analysis was performed while varying the thresholds. A pure gradient of direct costs of tuberculosis in relation to income was observed. Incidence (78.1%) and intensity (14.8%) of catastrophic expenditure were high; varying thresholds was insensitive to the intensity. Incurring catastrophic expenditure was independently associated with lower- and middle-income quintiles (adjusted odd ratio (aOR) = 36.2, 95% CI [12.3-106.3] and aOR = 6.4 [2.8-14.6]), adverse pre-diagnosis stage (aOR = 5.4 [2.2-13.3]) and less education (aOR = 4.1[1.9-8.7]). Households incurred important days lost due to TB, indebtedness (37.1%), dissaving (51.0%) and other coping strategies (52.7%). Catastrophic direct costs and substantial indirect and coping costs may persist under the 'free' tuberculosis diagnosis and treatment strategy, as well as inequities in financial hardship.

INVESTIGATING PASSENGERS’ PERCEIVED VALUE OF FULL SERVICE AIRLINES AND LOW-COST CARRIERS

This study investigates the customer perceived value seen by Taiwanese passengers who flew between Taipei and Singapore regarding full service airlines and low-cost carriers. We collected a sample of passenger survey data at Taiwan Taoyuan International Airport. Five constructs, forming into customer perceived value, namely, nonmonetary cost, perception of monetary cost, reputation, service quality, and service contact are identified based on the results of factor analysis. A regression model is then adopted to measure the relationships between customer perceived value and potential determinants. Passengers from traditional airlines determined their perceived value based mostly on what they gained from the airlines. Nevertheless, passengers formed their perceived value for the low-cost carrier, Jetstar in this study, according to the trade-off between what they gave, especially the nonmonetary cost, and what they received.

Cost-effectiveness of health research study participant recruitment strategies: a systematic review.

A large fraction of the cost of conducting clinical trials is allocated to recruitment of participants. A synthesis of findings from studies that evaluate the cost and effectiveness of different recruitment strategies will inform investigators in designing cost-efficient clinical trials. To systematically identify, assess, and synthesize evidence from published comparisons of the cost and yield of strategies for recruitment of participants to health research studies. We included randomized studies in which two or more strategies for recruitment of participants had been compared. We focused our economic evaluation on studies that randomized participants to different recruitment strategies. We identified 10 randomized studies that compared recruitment strategies, including monetary incentives (cash or prize), direct contact (letters or telephone call), and medical referral strategies. Only two of the 10 studies compared strategies for recruiting participants to clinical trials. We found that allocating additional resources to recruit participants using monetary incentives or direct contact yielded between 4% and 23% additional participants compared to using neither strategy. For medical referral, recruitment of prostate cancer patients by nurses was cost-saving compared to recruitment by consultant urologists. For all underlying study designs, monetary incentives cost more than direct contact with potential participants, with a median incremental cost per recruitment ratio of Int$72 (Int$-International dollar, a theoretical unit of currency) for monetary incentive strategy compared to Int$28 for direct contact strategy. Only monetary incentives and source of referral were evaluated for recruiting participants into clinical trials. We did not review studies that presented non-monetary cost or lost opportunity cost. We did not adjust for the number of study recruitment sites or the study duration in our economic evaluation analysis. Systematic and explicit reporting of cost and effectiveness of recruitment strategies from randomized comparisons is required to aid investigators to select cost-efficient strategies for recruiting participants to health research studies including clinical trials.

Preventing dengue through mobile phones: Evidence from a field experiment in Peru

Dengue is the most rapidly spreading mosquito-borne viral disease in the world (WHO, 2009). During the last two decades, the dramatic rise in the number of dengue infections has been particularly evident in Latin American and the Caribbean countries. This paper examines the experimental evidence of the effectiveness of mobile phone technology in improving households’ health preventive behavior in dengue-endemic areas. The main results suggest that repeated exposure to health information encourages households’ uptake of preventive measures against dengue. As a result, the Breteau Index in treatment households, an objective measure of dengue risk transmission, is 0.10 standard deviations below the mean of the control group, which shows a reduction in the number of containers per household that test positive for dengue larvae.The estimates also show marginally significant effects of the intervention on self-reported dengue symptoms. Moreover, we use a multiple treatment framework that randomly assigns households to one of the four treatment groups in order to analyze the impacts of framing on health behavior. Different variants emphasized information on monetary and non-monetary benefits and costs. The main results show no statistical differences among treatment groups.

Smoking outside: the effect of the Irish workplace smoking ban on smoking prevalence among the employed

In March 2004, Ireland became the first country to introduce a nationwide workplace smoking ban. The primary aim of the ban was to reduce people's exposure to second-hand smoke. A 95% compliance rate among employers suggests this aim was achieved. By prohibiting smoking in the majority of indoor working places, an effect of the ban was to increase the non-monetary cost of smoking. The aim of this paper is to examine whether the extra non-monetary cost of smoking was concentrated on the employed. A difference-in-differences approach is used to measure changes in smoking behaviour among the employed relative to the non-working population following the introduction of the workplace smoking ban. The research finds that the workplace smoking ban did not induce a greater reduction in smoking prevalence among the employed population compared with the non-working population. In fact, the evidence suggests a significantly larger decrease in smoking prevalence among the non-workers relative to the employed. Changes in the real price of cigarettes and changes in attitudes to risk are discussed as possible causes for the pattern observed.

Regulation in the Pulp and Paper: Costs and Consequences

The paper and pulp industry is one of the most heavily regulated industries in the United States. This working paper investigates the extent to which environmental and workplace regulations affect the industry and evaluate the impact of these regulations on the industry, its customers, its employees and society in general. A review of literature on this topic reveals that numerous scholars have attempted to discern the effects of specific regulations on the industry or attempted to place a dollar value on what pollution abatement costs paper manufacturers. In this paper, we will take their findings into account, identify which regulations affect the industry, and describe the total cost these regulations impose on society. We investigate the tangible and direct costs of regulation, meaning the amount that regulation actually costs companies within the industry in dollar terms, as well as the less-visible, non-monetary costs resulting from regulation. Regulation also inevitably creates unforeseen costs that neither the regulators nor participants in the market could have anticipated, and those unanticipated consequences of regulation often create the very types of problems the regulators intended to reduce or eliminate. Although the paper and pulp industry incurs a relatively high regulatory burden, firms in the industry also tend to be quite large, which gives them the advantage of being able to disperse the costs of regulation over more units. It therefore remains unclear whether regulation affects firms in this industry to a greater or lesser extent than the average firm in the United States in absolute terms, but the industry nonetheless serves as an example of the costs and consequences of government regulation.

Online Shopping and Platform Design with Ex Ante Registration Requirements

We study platform design in online markets in which buying involves a (non-monetary) cost for consumers caused by privacy and security concerns. Firms decide whether to require registration at their website before consumers learn the price and all relevant product information. We show that a monopoly seller requires ex ante registration in equilibrium if and only if the consumer's ’registration cost is sufficiently low. The result is reinforced when incorporating future purchases or an informational value of consumer registration to the fi rm, and it is robust to introducing price competition. We also show that discounts (store credit) can increase the share of consumers who register and hence a fi rm'’s profi t even though discounts distort the equilibrium price.