optimism and pessimism a cross country comparison optimism and pessimism influence economic choices if consumers are optimistic they tend to spend a greater proportion of their budget shares on luxuries and a lesser proportion on necessities many models of consumer expenditure do not take into account the influence of optimism and pessimism this paper demonstrates a way to indirectly measure optimism and pessimism by focusing on patterns in engel curve residuals for necessities and luxuries using the revised international comparison program icp 2005 data covering 144 countries this paper presents economy wide optimism and pessimism indicators these indicators provide a useful complement to traditional economic measures of standard of living such as real gross domestic product gdp in purchasing power parity ppp terms these indicators are non economic in traditional terms however since they are constructed as residuals from an economic analysis they could act as a very useful complement to traditional economic indicators and as such may be termed quality of life indicators

is utility additive the case of alcohol the hypothesis of additive utility or preference independence is often applied to the demand for broad aggregates recent testing provides some evidence favourable to the hypothesis thus overturning the older results based on the standard asymptotic tests which are seriously biased against the null in small samples using data for seven countries and a variety of tests this paper shows that preference independence also cannot be rejected for more narrowly defined commodities beer wine and spirits the implications of the results for efficient taxation of alcoholic beverages are also explored

the nested piglog model an application to u s food demand a new demand system is introduced the nested piglog model nesting thirteen other demand systems including five that are also new this new model and its nested special cases are applied to models of u s food demand that include food at home fah food away from home fafh and alcoholic beverages although nested tests and out of sample forecasting performance favor generalizing models to a certain degree statistically insignificant improvements to in sample fit and even poorer out of sample forecast accuracy undermine further generalizations based on a subset of preferred models fafh is found to be price and income elastic compared to fah which is price and income

broadcast advertising and u s demand for alcoholic beverages quarterly data for 1977 1994 on alcohol consumption and advertising are used to estimate a differential demand system including explanatory variables for broadcast advertising and print advertising the model explains the growth rate of per capita consumption dependent on explanatory variables for prices real income demographic changes and real advertising by media and beverage empirical results also are reported for total consumption of pure alcohol the results for the three beverages and total alcohol indicate that advertising has little or no effect on demand the empirical evidence thus supports the notion that regardless of media advertising affects mainly brand shares

global ethics of collective internet governance intrinsic motivation and open source software the ethical governance of the global internet is an accelerating global phenomenon a key paradox of the global internet is that it allows individual and collective decision making to co exist with each other open source software oss communities are a globally accelerating phenomenon oss refers to groups of programs that allow the free use of the software and further the code sharing to the general and corporate users of the software the combination of private provision and public knowledge and software and the seeming paradox of economic versus social motivations have stimulated a wide debate between researchers and policymakers in this article we analyze oss communities from the viewpoint of intrinsic motivation knowledge creation and collective internet governance we believe that the growth of global oss has fundamental implications for business ethics and the governance of the global internet in the twenty first century

a generalization of working s model abstract working s 1943 model states that budget shares are linear functions of the logarithm of income it implies constant differences between corresponding marginal and budget shares a one parameter generalization is proposed which allows each marginal share to be a linear function of the corresponding budget share this model can be further extended with one extra parameter so that all goods are either specific substitutes or specific complements

a comparative study of modelling the demand for food in the united states and the netherlands this paper provides time series and cross sectional budget survey analyses of the demand for food in the united states and the netherlands according to the tasks set by jan magnus and mary morgan mm various econometric methods including weighted least squares wls cointegration error correction the almost ideal demand system aids and time varying parameter tvp techniques are used and the estimated demand elasticities compared across country and over time 1997 john wiley sons ltd

incentives in principal agent relationships this article identifies some of the major issues that have been examined in the literature on incentives the article begins by discussing the frictions that lie at the heart of incentive problems next the principal s optimal response to these frictions is explored taking as given the characteristics of the agents with whom the principal interacts in a nonrepeated setting the design of individualized contracts contests and tournaments is analyzed then the principal s task of selecting the best agent is addressed and repeated agency relationships are considered

the demand for food in the united states and the netherlands a systems approach with the cbs model we analyse the demand for food in the usa and the netherlands in the period 1929 88 using a differential consumer demand system the cbs model and we compare our results with those of tobin for the usa we find an income elasticity of 0 75 both in budget survey data and in time series data which is higher than those found by tobin and an own price elasticity of 0 45 for the netherlands we obtain an income elasticity of 0 35 in time series data and 0 65 in individual budget survey data and an own price elasticity of about 0 20

seller beware how bundling affects valuation abstracthow does bundling affect valuation this research proposes the asymmetry hypothesis in the valuation of bundles consumers demand more compensation for the loss of items from bundles compared with the loss of the same items in isolation yet they express lower willingness to pay for items added to bundles compared with the same items purchased separately this asymmetry persists because bundling causes consumers to perceive multiple items as a single inseparable gestalt unit thus consumers resist altering the whole of the bundle by removing or adding items six studies demonstrate this asymmetry across judgments of monetary value studies 1 and 2 and dis satisfaction study 3 moreover bundle composition the ability of different items to create the impression of a whole moderates the effect of bundling on valuation study 4 and the need to replace missing items i e restoring the whole mediates the effect of bundling on compensation demanded for losses study 5 finally the a

model selection and forecasting ability of theory constrained food demand systems out of sample forecasting of annual u s per capita food consumption applying data from 1923 to 1992 is used as a basis for model selection among the absolute price rotterdam model a first differenced linear approximate almost ideal demand system fdla alids model and a first differenced double log demand system conditional on price consumption forecasts derived from elasticities are determined to be superior to direct statistical model forecasts models with consumer theory imposed through parametric restrictions provide better forecasts than models with little theory imposition for these data a double log demand system is a superior forecaster to the rotterdam model which is superior to the fdla alids model

entrepreneurship social mobility and income redistribution in south india development economists have been preoccupied with the problem of increasing the size of the gnp pie to the relative neglect of its distribution despite the recent disenchantment with the viewpoint that all classes share in the benefits of industrial growth empirical data on the distribution of income business opportunity and economic power are in short supply many of the studies on entrepreneurship and economic development when they are not apologetics for ruthless capitalist exploitation as paul baran suggests extol the achievements of the capitalist entrepreneur without examining class origins and monopoly advantage joseph schumpeter sees entrepreneurs irrespective of class origin as heroic figures with the dream and will to found a private kingdom to conquer adversity to achieve success for its own sake and to experience the joy of creation for gustav papanek 1967 the private entrepreneur who is frugal diligent far sighted remarkably able and willing to take political risks is in large part responsible for the success of pakistan in achieving rapid industrialization

a cross country analysis of consumption patterns this paper uses the system wide approach to analyse the consumption patterns in 18 oecd countries the results show that on average the oecd per capita consumption increased by 3 per annum and prices increased by about 7 per annum oecd consumers spend about half of their income on food housing and transport it is also shown that in most oecd countries food housing and medical care are necessities and clothing durables transport and recreation are luxuries and that the demand for all goods considered are price inelastic the controversial hypothesis of stigler and becker 1977 that tastes are the same across countries is also tested and it is found that the oecd consumption data do not support their claim

world product and income a review article kravis heston and summers provided comparable price and volume data for gross domestic product and its components for each of 34 countries varying in affluence from india and malawi to the united states the article discusses the data and the way in which they are generated and considers the use of these data for applied demand analysis

on the correspondence between individual and aggregate food consumption functions evidence from the usa and the netherlands this paper provides evidence from the us and dutch budget surveys that income elasticity of family food consumption is a function of family income and other observable characteristics of the household it also finds that the conditional variance of family food consumption depends on family income this complicated pattern of dependence of family food consumption on income breaks the exact correspondence between the family and the aggregate food consumption functions simple dynamic models for aggregate food consumption are developed which are used for forecasting 1997 john wiley sons ltd

an inverse demand system for u s composite foods this article provides a theoretically consistent framework for estimating a complete price dependent demand system where the concept of distance function and its related substitution and scale effects are used the approach is applied to a u s demand system consisting of thirteen food and one nonfood categories

price elasticities of demand are minus one half abstract as an empirical regularity for broad groups price elasticities of demand are scattered around minus one half a result not inconsistent with preference independence when nothing is known about the price sensitivity of a good a reasonable first approximation to its price elasticity is minus one half

affluence and food a simple way to infer incomes accurate and timely measures of cross country real incomes are still a rarity as the share of expenditure devoted to food is readily available we use engel s law in reciprocal form to measure affluence analysis of real income data for over 100 countries indicates that this approach is viable to recognize the role of uncertainty in the analysis we present the results in the form of stochastic cross country income comparisons

empirical regularities in south african consumption patterns this article investigates a number of empirical regularities in the south african consumption patterns the data support the following empirical regularities 1 variability in consumption systematically exceeds the variability in prices 2 law of demand 3 income flexibility is about 0 5 4 engel s law and 5 the demand hypotheses demand homogeneity and slutsky symmetry are acceptable in contrast to the findings for a number of other countries another important empirical regularity that consumer s utility function is additive is rejected for the south african consumers based on the implied demand elasticity estimates from the preferred model it is found that food housing and medical care are necessities and clothing furniture transport and recreation are luxuries and demand for all the commodities are price inelastic

why my mother never threw anything out the effect of product freshness on consumption this research focuses on a pervasive but largely unexamined product attribute freshness date to shed light on how and why its influence on the consumption of perishable products changes with product ownership drawing on recent research on the endowment effect we demonstrate that even when the differential costs implicit in ownership are controlled for consumers are more likely to actually consume a product past its freshness date when they own it than when they do not moreover this ownership based increase in consumption is accompanied by lower estimates by consumers of their likelihood of getting sick from consuming the product past its freshness date these outcomes are driven in turn by consumers ownership based susceptibility to engage in selective and confirmatory testing of the hypothesis that the product past its freshness date is consumption worthy i e approach goal rather than the alternate default hypothesis that it is not consumption worthy i e avoidance goal

uncertainty risk aversion and wta vs wtp we examine a previously unstudied category of exchange items in which the true value is unknown to both the buyer and seller at the time of exchange but becomes known to both at a future time after the exchange real world examples of such exchange items as in our study include forward contracts and fixed fee turnkey contracts we demonstrate that the discrepancy between the seller s willingness to accept wta and buyer s willingness to pay wtp increases with 1 the level of uncertainty about the exchange item s value and 2 the exchange parties level of risk aversion in a series of studies we manipulate and measure the level of uncertainty of the exchange item measure the level of risk aversion of the exchange parties and study the respective effects on decreasing the wtp while increasing the wta

the moderating effect of relationship norm salience on consumers loss aversion people are said to be loss averse when their pain of losing something exceeds their joy of gaining it this research proposes and tests a new moderator of loss aversion the type of relationship norms salient at the time the loss or the gain is experienced we suggest that mere salience of the norms of a communal relationship based on concern for the partner relative to those of an exchange relationship based on quid pro quo leads to a greater degree of loss aversion a typical endowment effect study supports our overall thesis and shows that differences across relationship norms are stronger in selling prices willingness to accept than in buying prices willingness to pay

revisiting tobin s 1950 study of food expenditure this re analysis of tobin s 1950 study makes three points 1 graphs are a powerful device for discovery and for communication and can reveal much of the information in the data 2 squeezing out the more subtle multivariate messages requires some solution to the usual overparameterization problem data mining is still the treatment of choice for this crippling disease but it is more akin to leeches than to anti biotics a bayesian sensitivity analysis is an alternative but it isn t a perfect cure either 3 clear identification of the issues can help keep the enterprise from wandering off in technically amusing but largely irrelevant directions 1997 john wiley sons ltd

economies of scale household size and the demand for food household scale economies are plausibly attributed to shared household public goods that make larger households better off at the same level of per capita resources larger households should therefore have higher per capita consumption of private goods such as food provided that they do not substitute too much toward the effectively cheaper public goods the evidence shows exactly the opposite data from rich and poor countries indicate that at constant per capita total expenditure the per capita demand for food decreases with household size and that it does so most in the poorest countries where substitution should be the least

an implicitly additive demand system the problem of endowing large applied general equilibrium models with numerical values for parameters is formidable for example a complete set of own and cross price elasticities of demands for the monash model of the australianeconomy involves in excess of 50000 items invoking the minimal assumptions that demand is generated by utility maximization reduces the load to about 26000 obviously still a number much too large for unrestrained econometric estimation to obtain demand systems estimates for a dozen or so generic commodities at a top level of aggregation categories like food clothing and footwear etc typically johansen s lead has been followed and directly additive preferences imposed upon the underlying utility function with the move beyond one step linearized solutions of applied general equilibrium models the functional form of the demand system adopted becomes an issue the most celebrated of the additive preference demand systems the linear expenditure system les has one

further results on aggregation of differential demand equations barnett 1979a 1981 theil s extending 1971 work aggregates differential demand equations in absolute undeflated prices this paper extends further these results by deriving aggregate macro demand equations in relative prices under stated assumptions these equations are analogous to the individual consumer s micro demand equations and the properties of the microcoefricients carry over

why is consumption more log normal than income gibrat s law revisited significant departures from log normality are observed in income data in violation of gibrat s law we identify a new empirical regularity which is that the distribution of consumption expenditures across households is within cohorts closer to log normal than the distribution of income we explain these empirical results by showing that the logic of gibrat s law applies not to total income but to permanent income and to maginal utility these findings have important implications for welfare and inequality

fundamental similarities in consumer behaviour diversities and similarities in international consumption patterns are highlighted a large body of data is used to identify cross country consumption differences and to understand these in terms of the familiar utility maximizing framework in which observed differences in prices and incomes play the key role taken as a whole the results reveal a surprising degree of similarity in international consumption patterns and support the idea that tastes are constant at least with respect to broad commodity groups

the endowment effect as self enhancement in response to threat the discrepancy between willingness to pay wtp and willingness to accept wta for a product referred to as the endowment effect has been investigated and replicated across various domains because of its implications for rational decision making the authors assume that implicit processes operate in the endowment effect and propose an explanation that is derived from the two main accounts of the effect ownership and loss aversion based on the implicit egotism and self affirmation literatures the model argues that selling is perceived as an implicit self threat and that sellers as a part of their automatic defense mechanism respond to this self threat by enhancing the value of the self associated object five studies test these conjectures and provide support for the proposed model

is there curvature in the slutsky matrix d o the poor substitute among commodities more flexibly than the rich when relative prices change even when compensated for the income effects of the price changes is it necessary to add a third dimension to the slutsky substitution matrix to identify household income in short do the terms of the slutsky elasticity matrix curve smoothly from poor households to rich households in such a way that equation 1 is meaningful

world food demand long term projections of global food demand are heavily dependent on which functional form of the food demand equation is used given that real incomes can change substantially over the long term key elements are the dependence of the income elasticity on income which ensures that the food budget share always lies within the 0 1 range and the role of income inequality this article analyzes these issues proposes a new functional form that deals with them and presents estimates of income and price elasticities for food in 138 countries copyright 2012 oxford university press

pooling international consumption data pooling consumption data from different countries for demand system estimation is attractive because it increases both sample size and therange of v ariation of relative prices and income the major objection to pooling is that d ifferent countries may have different demand system parameters this paper propo sed and estimates specifications that permit pooling while allowing both short r un andlong run demand systems to differ across countries using data from belgi um the united kingdom and the united states the authors findthat although p ooling was accepted for some pairs of countries and some specifications it was rejected for most they conclude that caution is appropriate in pooling internat ional consumption data copyright 1987 by mit press

an empirically oriented demand system with improved regularity properties while the almost ideal demand system has received increasing attention in empirical studies of consumer demand the fact that the underlying piglog cost function is not globally regular has often led to violation of negative semidefiniteness in the estimated slutsky matrix this paper suggests a modification to the piglog class of preferences termed mpiglog which preserves regularity in a wider region of expenditure price space in an empirical section the almost ideal demand system special case of piglog is compared with the analogous special case of mpiglog which the authors term maids the comparison demonstrates the improved regularity features of maids

explaining the endowment effect through ownership the role of identity gender and self threat the price people are willing to pay for a good is often less than the price they are willing to accept to give up the same good a phenomenon called the endowment effect loss aversion has typically accounted for the endowment effect but an alternative explanation suggests that ownership creates an association between the item and the self and this possession self link increases the value of the good to test the ownership account this research examines three moderators that theory suggests should affect the possession self link and consequently the endowment effect self threat identity associations of a good and gender after a social self threat the endowment effect is strengthened for in group goods among both men and women but is eliminated for out group goods among men but not women these results are consistent with a possession self link explanation and therefore suggest that ownership offers a better explanation for the endowment effect

the generalized composite commodity theorem and food demand estimation this article reports tests of aggregation over consumer food products and estimates of aggregate food demand elasticities evidence that food demand variables follow unit root processes leads us to build on and simplify existing tests of the generalized composite commodity theorem we compute food demand elasticities using a method of cointegration that is shown to apply to a convenient but nonlinear functional form estimates are based on consumer reported expenditure data rather than commercial disappearance data appropriately specified models of consumer demand are central to market analysis it has been established that a valid equilibrium for markets characterized by diverse firms or diverse consumer products depends on downward sloping composite demand curves heiner braulke wohlgenant or on valid indirect utility functions chavas and cox given the large number of consumer food products food demand and price analysis must be implemented at some level of product aggregation improper aggregation can lead to biased estimates of welfare loss associated with public policies biased estimates of consumer and derived demand elasticities and misleading tests of market power testing for consistent aggregation over food products and estimating aggregate consumer food demand elasticities are the subjects of this article by far the most common justification for aggregation has been separable preferences one reason for its popularity has been the lack of a viable alternative tests of the composite commodity theorem hicks leontief lewbel are always rejected because it restricts relative prices within a group to remain fixed over time on the other hand aggregation based on weak separability is often rejected diewert and wales eales and unnevehr

the matrix approach to evaluating demand equations as there is a plethora of demand models which one should be used to estimate income and price elasticities the paper sheds light on this important practical problem by developing a matrix approach to simulating mas demand equations to analyse their performance under idealized circumstances artificial data on the dependent variable are generated by one model and these are then used for the estimation of another model as an illustrative application using four popular models a 4 4 matrix is generated which gives all pair wise comparisons the performance of the models is then evaluated on the basis of the quality of the income and own price elasticity estimates

compensation contracts do agency theory assumptions predict negotiated agreements this study examined how the ability to monitor an agent s actions and environmental munificence affect compensation contracts in principal agent dyads in a laboratory experiment we tested predict

the demand for food and calories we investigate nutrition and expenditure in rural maharashtra in india we estimate that the elasticity of calorie consumption with respect to total expenditure is 0 3 0 5 a range that is in accord with conventional wisdom the elasticity declines only slowly with levels of living and is far from the value of zero suggested by a recent revisionist literature in these indian data the calories necessary for a day s activity cost less than 5 percent of the daily wage which makes it implausible that income is constrained by nutrition rather than the other way around

the dilemma of accountability for professionals a challenge for mainstream management theories professional institutions are increasingly confronted by fiscal constraints and political pressures to improve and increase their accountability in a competitive consumer driven market accordingly the need to ensure efficiency and accountability is of strategic importance this article reports on a qualitative study of medical professionals that assessed the utility of financial incentives and external control methods derived from agency theory to ensure accountability of professionals the authors argue that approaches derived from stewardship and institutional theories can extend the principal agent perspective to sustain greater social and ethical accountability

the endowment effect rose tinted and dark tinted glasses the endowment effect predicted by prospect theory is a robust finding in behavioral decision theory extending recent examinations of the underlying processes we present evidence for differential perceptions of the traded item with sellers focusing more on positive features and less on negative features relative to buyers in experiment 1 sellers and buyers access information of differing valence in a free recall task experiment 2 utilizes error rates and response latencies to demonstrate systematic and differing patterns of errors and biases in reactions to valenced stimuli experiment 3 utilizes contrast effects to manipulate these foci thereby moderating the endowment effect

estimating consumer demands across the development spectrum maximum likelihood estimates of an implicit direct additivity model abstract this paper characterizes consumer demand patterns across the development spectrum using elasticity estimates from a demand system possessing non linear engel effects demands for six broadly defined goods are then projected under the assumption that per capita expenditure growth rates differ across the development spectrum such projections illustrate the extent to which non linear income effects generate more plausible demand responses estimated marginal budget shares for food decline in a logistical manner and range from about 0 5 for ethiopia to less than 0 05 for the usa engel elasticities for food range from 0 95 for ethiopia to less than 0 1 for the usa

eliciting time versus money time scarcity underlies asymmetric wage rates marketing strategies are often tied to how consumers spend time e g waiting in lines searching across stores in return for money e g receiving a discount viewing such time money tradeoffs in terms of a reservation wage rate for consumers we identify a wage rate asymmetry between two elicitation procedures a money elicit mel state the minimum amount of money m that you would accept in return for spending a given number of hours t and b time elicit tel state the maximum number of hours t that you would spend in return for accepting a given amount of money m while these procedures are normatively equivalent we propose that tel vs mel wage rates are higher because time scarcity receives a higher weight in tel judgments in eight studies including both hypothetical and real settings we document the wage rate asymmetry the time scarcity process and a downstream consequence of tel vs mel reducing the likelihood of accepting a time money tradeoff we discuss the implications for practice and for research on wage rates time versus money procedural invariance and scarcity

statistical demand functions for food in the usa and the netherlands summary this paper reports results of an extensive analysis of statistical demand functions for food using household survey data and aggregate time series data on food consumption in the usa and the netherlands using the model put forward by tobin 1950 for survey data we find that socio economic information on the composition education and status of households adds little to the explanation of food consumption the income elasticity of food consumption decreases over time in the usa but increases in the netherlands applying multivariate cointegration analysis to the time series data we find that strict price homogeneity structural stability and weak exogeneity of prices have to be rejected statistically at conventional significance levels whereas weak exogeneity of food consumption cannot be rejected the long run income elasticity tends to decrease over time for us data and is roughly constant for dutch data the findings corroborate earlier findings for the survey data the rejection of price exogeneity is consistent with tobin s model which treats prices as endogenous 1997 john wiley sons ltd