Reduce Consumer Demand Research Articles

The Euro Crisis: Mission Accomplished?

The Euro Crisis: Mission Accomplished?

Dispatches

Dispatches

An analysis of dentists' incomes, 1996–2009

BackgroundThe U.S. economy is beginning to recover from the most significant contraction since the Great Depression. Several sectors, including dentistry, have experienced reduced consumer demand and reduced earnings. Focusing on general practitioners, the authors analyzed trends in various factors that drive dentists' income to identify which of these factors are most important in explaining the recent decline. They then offer their views on future trends in dentists' net income levels. MethodsThe authors used data from a nationally representative survey of dentists maintained by the American Dental Association (ADA) and data from the Agency for Healthcare Research and Quality's Medical Expenditure Panel Survey to analyze trends in real gross billings per visit, rates of collection of gross billings, number of visits to a dentist, percentage of the population who visited a dentist, population to dentist ratio and average real practice expenses. ResultsThe authors found that the recent decrease in dentists' net income levels was driven primarily by a decrease in utilization of dental care on the part of the population. Moreover, this decline in dental care use, although most pronounced during the economic downturn, appeared to have started before the downturn began. This suggests that more factors than solely the economic recession are affecting changes in dental care utilization patterns. ConclusionsThe authors' findings suggest that average real net income for dentists may not necessarily recover to prerecession levels once economic conditions in the United States improve. This finding, combined with the potential implications of health care reform for dentistry, causes the authors to believe the future prospects related to dentists' net income levels remain uncertain.

Reducing urban demand for wild animals in Vietnam: examining the potential of wildlife farming as a conservation tool

AbstractVietnam is an established thoroughfare for illegal trade in wildlife and growing urban prosperity is believed to be increasing domestic demand for wild animal products and for wild meat in particular. While the debate about the potential for wildlife farming to reduce incentives to hunt and trade continues, the findings of this study (based on data collected through semistructured interviews with the central Hanoi population) demonstrate that farming is not an effective tool in reducing demand for illegal wildlife products and may in fact stimulate greater demand for wild‐caught products. In this context, conservation policy should seek to prevent listed species being farmed for consumption as wild meat; to reduce consumer demand for wild meat through marketing campaigns developed by social marketing experts and based on an in‐depth understanding of the drivers of consumer demand garnered using appropriate social science research methods; and to continue strengthening regulation and enforcement actions preventing illegal trade in wild species.

An inquiry into the causes of inadequate household consumption in China—An analysis based on provincial data of urban and rural China

This paper uses Chinese urban and rural panel data for 30 provinces, autonomous regions and municipalities (except Tibet and Taiwan) on the consumption of Chinese urban and rural households in 1995–2005, by constructiong a random effect model, to analyze the impact of sources of household’s consumption demand on the Chinese economy. The quantitative analysis reveals that the per capita disposable income of households is highly relevant in explaining households’ per capita consumption expenditure, in these eleven years, and that China’s consumption function was fairly stable. On the basis of flow of funds accounts (barter transaction) data in 1992–2004, the paper further reveals that, since 1997–1998, China’s consumer demand remains in the doldrums because of the following distribution and redistribution process of the national income: The Government’s share of total income and disposable income is becoming ever larger, while the share of households is declining. Aside from the result that a rise in the burden of personal tuition has a negative impact on per capita consumption demand for urban households, we have not found that housing reform or medical expenses significantly reduce consumer demand in China. We believe that low household consumption demand is caused mainly by the income redistribution between households, government, and corporations rather than the inequality in income distribution across households.

A Better Way to Generate Comparative-Effectiveness Research

Advocates of a new federal comparative-effectiveness agency argue that such information has characteristics of a public good, therefore markets will not generate the efficiency-maximizing quantity. However, economic theory does not conclude that government should provide comparative-effectiveness research, nor that government provision would increase social welfare. Opponents warn that a such an agency would lead to government rationing of medical care - indeed, that's the whole idea. If history is any guide, however, the more likely outcome is that the agency would be completely ineffective. A better way to generate the desired research would be to eliminate government activities that suppress private production. Federal tax and entitlement policies reduce consumer demand for such research. Those policies, as well as state licensing of health insurance and medical professionals, inhibit the types of health plans best equipped to generate comparative-effectiveness information. Congress should let workers and Medicare enrollees control the money that purchases their health insurance, and should require states to recognize other states' licenses for medical professionals and insurance products. That laissez-faire approach would both increase comparative-effectiveness research and increase the likelihood that patients and providers would use it.

Real Effects of the Subprime Mortgage Crisis: Is it a Demand or a Finance Shock?

We develop a methodology to study how the subprime crisis spills over to the real economy. Does it manifest itself primarily through reducing consumer demand or through tightening liquidity constraint on non-financial firms? Since most non-financial firms have much larger cash holding than before, they appear unlikely to face significant liquidity constraint. We propose a methodology to estimate these two channels of spillovers. We first propose an index of a firm's sensitivity to consumer demand, based on its response to the 9/11 shock in 2001. We then construct a separate firm-level index on financial constraint based on Whited and Wu (2006). We find that both channels are at work, but a tightened liquidity squeeze is economically more important than a reduced consumer spending in explaining cross firm differences in stock price declines.

Is Silence Golden? Confidentiality and Correlated Culpability

We consider the formation and legal protection of secret agreements by analyzing a negotiated settlement between a harmed plaintiff and a culpable defendant that seeks to disenfranchise a second harmed plaintiff by keeping the existence (and details) of the instant settlement secret. This is done so as to reduce the likelihood of the second plaintiff suing the defendant for damages or, failing that, to reduce the losses incurred by the defendant in the second suit. Such agreements happen every day and are generally legal, but are they socially optimal? Formally, we consider a sequence of incomplete information bargaining games wherein uninformed plaintiffs make demands of the informed defendant, with the defendant and the first plaintiff recognizing that their actions in the first case may convey information about the defendant's culpability to the second plaintiff. We then use the results of the analysis to provide insight as to when the law should prohibit or permit confidential agreements. We find that, even though early plaintiffs prefer permitting confidentiality and later plaintiffs prefer prohibiting it, the average plaintiff prefers prohibition. We also show that defendants always prefer that confidentiality be permitted. When role-interim decisions (that is, decisions made when agents know whether they are likely to be plaintiffs or defendants) have no (or small) adverse welfare consequences, society would (ex ante) prefer permitting confidential settlements. However, if agents know their roles, then this conflict of preferences can mean reduced consumer demand due to perceived incentives for firms to reduce care and due to the expectation of undercompensation for harms suffered. This can lead to further reduced care and provide reduced incentives to innovate. Furthermore, confidentiality potentially biases perceived reputations of firms, potentially leading consumers to avoid trade due to concern for adverse selection and moral hazard. We also show how this analysis can systematically inform the exercise of judicial discretion with regard to such agreements.

User charges and bureaucratic inefficiency

This paper develops the theoretical reasons why user charge finance leads to improved government efficiency and reduced expenditures. It is argued that user charges constrain bureaucratic behavior, thus forcing the bureau to operate closer to the true demand curve for the service. Further, it is argued that user charges reduce consumer demand by connecting use and payment and by breaking fiscal illusion. This analysis leads one to expect that greater reliance on user charge finance would lead to lower government expenditures. An empirical test is performed which supports this hypothesis. The theoretical results combined with this empirical test suggest that user charges do generate lower government expenditures and a more efficient government.

The birth controllers:: Limitations on Out-of-Hospital Births

The historical trend away from out-of-hospital births and toward hospital births reflects an effort by physicians to retain control of maternity services. Physicians have sought to discourage nonhospital births by reducing consumer demand and by restricting midwifery and physician attendance at nonhospital births. Various strategies have been used to formally and informally restrict birth options. The impact of legislative and other restrictions on place of birth are discussed.