the value priority hypotheses for consumer budget plans based on the behavioral sciences and mathematical programming we hypothesize that consumers rank durables by a value or net value priority approximated by utility per dollar or utility minus price and plan to choose items in that order up to a budget cutoff this paper derives these hypotheses and develops a convergent linear programming procedure to estimate utility using primary field data on reservation prices purchase probabilities lottery orders and combination prizes we estimate utilities and compare the hypotheses to 215 actual budget plans lisrel v analysis provides further support for the hypotheses

product cannibalization and the role of prices the role of brand prices in contributing to product cannibalization is examined price elasticities and reference price theory are used to provide a theoretical foundation and empirical test for the impact of a firm s cheap brand on one of its expensive brands results are consistent with the conclusion that the market share of the company s premium brand was cannibalized by a growth in sales of its cheap brand

working wives and major family expenditures replication and extension this paper updates and replicates an earlier study comparing purchases by working wives employed outside the home and nonworking wives and the amounts spent for time saving durables other durables and hobby and recreation items using a 1977 data base similar to one gathered a decade earlier wife s labor force behavior was again found not to be significantly related to either purchase or expenditure decisions for time saving durables when income stage of life cycle and other situational variables were held constant

consumer demand for food diversity evidence for germany abstract whereas a large number of empirical studies have been devoted to analysing consumer demand for specific products much less attention has been paid to the household s demand for product variety the number of different products consumed in a specific time period this paper analyses consumer demand for food variety in germany the econometric analysis of 4632 households suggests that variety significantly increases with income and the number of children aged between 7 and 17 years and is significantly higher if the family lives in larger cities in east germany and the housekeeping person is not additionally working full time a single male household consumes a significantly smaller number of different food products the significant and positive impact of household income on food variety is in line with the hypothesis that consumption evolves along a hierarchical order as income increases

female labor force participation and time saving household technology a case study of the microwave from 1978 to 1989 american households are facing severe time constraints as women increase their participation in the wage economy the implications of this situation for the adoption of time saving technology in the home are not well understood previous research suggests several scenarios regarding the consequences of female labor force participation for the purchase of time saving technology 1 there may be no effect 2 female labor force participation may have a direct effect 3 female labor force participation may have an indirect effect through income or 4 direct effects emerge over time this article evaluates these hypotheses with a case study of the microwave oven through proprietary cross sectional surveys of married couple households conducted from 1978 to 1989

heuristics and biases in timing the replacement of durable products the process by which individuals make recurrent decisions about when to replace durable goods is examined two experiments are reported in which subjects play the role of purchasing agents who must repeatedly decide whether to keep a currently owned manufacturing device or replace it with a superior new one given uncertainty about the future performance of new and currently owned machines replacement patterns are compared with those that would be predicted if subjects made decisions as rational economic agents following the principles of optimal replacement theory this comparison reveals a number of systematic departures from optimality that do not vanish with experience among these are a tendency to replace at a slower rate than would be predicted by normative theory and a tendency to weigh opportunity costs arising from obsolescence greater than those arising from product deterioration in addition subjects display a bias against making replacement purchases given short lapses of time since the previous replacement the findings are interpreted in terms of known biases in decision making under uncertainty in dynamic and static settings

a micro analytic threshold model for the timing of first purchases of durable goods a micro analytic threshold model to describe the timing of household purchases of consumer durable goods is developed and tested the model incorporates unobserved heterogeneity via a generalized gamma distribution and accounts for time varying covariates further we employ estimation methods applicable or purchase data observed at periodic intervals of time the model outperforms other competing models for predicting the timing of purchase of durable goods in terms of fit and predictive ability in particular this model outperforms the logit model and the diffusion model the generalized gamma timing model predicts well the time to purchase the durable good we show how it can be employed for micro segmentation of households several research directions and applications are described

intergenerational redistribution with short lived governments we study the politics of intergenerational redistribution in an overlapping generations model with short lived governments the successive governments who care about the welfare of the currently living generations and possibly about campaign contributions are unable to pre commit the future course of redistributive taxation in a stationary politico economic equilibrium the intergenerational transfer in each period depends on the current value of the state variable and all expectations about future political outcomes are fulfilled we find that there exist multiple stationary equilibria in many political settings steady state welfare is often lower than it would be in the absence of redistributive politics

working wives and expenditure on services the major focus of this research is the relationship between a wife s employment and expenditure on time saving services multiple regression analysis of data from the 1972 1973 consumer expenditure survey indicates that two measures of the extent of a wife s participation in the labor force were influential in determining monetary outlay on services that are expected to be sensitive to the value of time other factors such as family income education and stage of the family life cycle also exert an impact on expenditure findings indicate that family expenditure on services is a complex process influenced by many factors besides a wife s employment

modeling purchase timing and brand switching behavior incorporating explanatory variables and unobserved heterogeneity the authors use a continuous time semi markov approach to analyze in a single framework the purchase timing and brand switching decisions of households for a frequently purchased product the analysis provides more insights into the dynamics of household purchase behavior than could be obtained from conventional discrete choice models such as logit or probit the authors find that the probability distribution of interpurchase times is not the same for various switching between brands revealing extra information about the purchase timing decisions further they find that though the marketing mix and household demographic variables explain a large part of the variation in the brand switching rates they account for only a small part of the variation in the repeat purchase rates another finding from the analysis is that the rates of switching between brands due to promotional activities such as special displays and price reductions are in reverse order to the share of purchases of the various brands

working wives and convenience consumption this paper examines role overload as a possible explanation for the lack of direct links between working wife families and convenience consumption role overload is combined with factors from past research in a structural equation model parameters are estimated using lisrel iv on data provided by an area cluster sample of 186 households from the milwaukee smsa the resultant model is generally supportive of the proposed theory

impact of off farm labor supply on food expenditures of the farm household abstract farm households diversify their income sources by working off the farm this is a risk management strategy that is used by farm households in both developed and developing countries income diversification via off farm work is associated with higher incomes and food consumption however little is known about the association between off farm work and farm household food expenditures in an effort to bridge this gap this study attempts to assess the impact of off farm work decisions by the operator and or the spouse on the food expenditures of the farm household using a nationwide farm household survey in the united states and new econometric method we find that the decisions of the operator and or the spouse to work off the farm are significantly interrelated 29 however these two decisions affect food expenditures in different ways the operator s off farm work decision is positively related to food expenditures while the spouse s decision is negatively associated with expenditures on food by the farm household

a micromodeling approach to investigate the advertising sales relationship the purpose of this paper is to derive a model of advertising effects on the firm s sales a micromodel is postulated and aggregated across individuals and over time to produce a macromodel of the aggregate sales advertising relationship for a single product the micromodel postulated is very simple it incorporates two factors reach of the ads and rate of decay of their effectiveness over time this approach to modeling advertising effects is shown to be fruitful in several respects 1 the coefficients of the aggregate equation are easily interpretable in terms of the reach and decay parameters 2 the model derived is nonlinear yet estimable 3 a special case of the model is very similar to lag models that have been in use 4 the model can be used whatever the unit of time is 5 the carryover effect of advertising as commonly defined is not constant but depends upon the previous spending levels and 6 the model helps illustrate that the duration of advertising may be greatly overstated if aggregate lagged dependent variable models are simplistically interpreted

technical note a price vector model of demand for consumer durables preliminary developments although considerable research has been conducted on optimal pricing policies for manufacturers relatively little work has been done on how price enters the consumer choice process in this paper a model is developed for durables purchasing which integrates both economic and behavioral research by specifying a vector of five price concepts which affect purchasing behavior of particular interest are variables relating to future price expectations due to data limitations a revised model is estimated and the results provide preliminary support for the general model

dynamic analysis of consumer response to marketing strategies this paper develops a methodology for modeling consumer response that integrates previous research in stochastic brand selection diffusion of innovation test market analysis and new product design the methodology makes it practical to extend brand selection models to include diffusion phenomena such as awareness trial and information flow purchase timing and brand selection are interdependent and both phenomena depend jointly on managerial controls such as advertising coupons price off promotion product positioning and consumer characteristics within this general structure we provide practical estimation procedures a least squares approximation to the maximum likelihood estimates to determine the parameters which link managerial controls to consumer response closed form solutions are derived for cumulative awareness cumulative trial penetration expected sales and purchases due to promotion all as a function of time we also provide simplified expressions for equilibrium t market share tradeoffs among complexity of the diffusion process number of managerial variables nonstationarity complexity of purchase timing consumer segmentation and sample size are made explicit so that the marketing scientist can customize his analyses to the managerial problems that he faces the effects of sample size data interval frequency and collinearity in the explanatory variables are investigated with simulations based on a five state consumer response process which depends on 8 10 marketing variables the paper closes with a brief description of the application and predictive test of a consumer response model based on the methodology

new product diffusion acceleration measurement and analysis it is a popular contention that products launched today diffuse faster than products launched in the past however the evidence of diffusion acceleration is rather scant and the methodology used in previous studies has several weaknesses also little is known about why such acceleration would have occurred this study investigates changes in diffusion speed in the united states over a period of 74 years 1923 1996 using data on 31 electrical household durables this study defines diffusion speed as the time it takes to go from one penetration level to a higher level and it measures speed using the slope coefficient of the logistic diffusion model this metric relates unambiguously both to speed as just defined and to the empirical growth rate a measure of instantaneous penetration growth the data are analyzed using a single stage hierarchical modeling approach for all products simultaneously in which parameters capturing the adoption ceilings are estimated jointly with diffusion speed parameters the variance in diffusion speed across and within products is represented separately but analyzed simultaneously the focus of this study is on description and explanation rather than forecasting or normative prescription there are three main findings 1 on average there has been an increase in diffusion speed that is statistically significant and rather sizable for the set of 31 consumer durables the average value of the slope parameter in the logistic model s hazard function was roughly 0 48 increasing with 0 09 about every 10 years it took an innovation reaching 5 household penetration in 1946 an estimated 13 8 years to go from 10 to 90 of its estimated maximum adoption ceiling for an innovation reaching 5 penetration in 1980 that time would have been halved to 6 9 years this corresponds to a compound growth rate in diffusion speed of roughly 2 between 1946 and 1980 2 economic conditions and demographic change are related to diffusion speed whether the innovation is an expensive item also has a sizable effect finally products that required large investments in complementary infrastructure radio black and white television color television cellular telephone and products for which multiple competing standards were available early on pcs and vcrs diffused faster than other products once 5 household penetration had been achieved 3 almost all the variance in diffusion speed among the products in this study can be explained by 1 the systematic increase in purchasing power and variations in the business cycle unemployment 2 demographic changes and 3 the changing nature of the products studied e g products with competing standards appear only late in the data set after controlling for these factors no systematic trend in diffusion speed remains unaccounted for these findings are of interest to researchers attempting to identify patterns of difference and similarity among the diffusion paths of many innovations either by jointly modeling the diffusion of multiple products as in this study or by retrospective meta analysis the finding that purchasing power demographics and the nature of the products capture nearly all the variance is of particular interest specifically one does not need to invoke unobserved changes in tastes and values as some researchers have done to account for long term changes in the speed at which households adopt new products the findings also suggest that new product diffusion modelers should attempt to control not only for marketing mix variables but also for broader environmental factors the hierarchical model structure and the findings on the systematic variance in diffusion speed across products are also of interest to forecasting applications when very little or no data are available

price reversals bid ask errors or market overreaction abstract we show that bid ask errors in transaction prices are the predominant source of apparent price reversals in the short run for nasdaq firms once we extract measurement errors in prices caused by the bid ask spread we find little evidence of market overreaction on the contrary we find that security returns are positively and not negatively autocorrelated we also show that bid ask errors lead to substantial spurious volatility in transaction returns about half of measured daily return variances can be induced by the bid ask effect

the value of trading consolidation evidence from the exercise of warrants we study the effect of trading consolidation by examining the response of liquidity and stock price to the exercise of deep in the money corporate warrants this enables a relatively clean test of the value of trading consolidation the exercise at the warrant expiration is fully anticipated and has no information content an effect can come from the value of trading consolidation that improves liquidity indeed we find that liquidity and stock prices both increase significantly at warrant expiration further the price increase is positively related to the pre exercise extent of fragmentation to post exercise improvement in stock liquidity and to the proportional increase in the number of shares following the warrant exercise

the dynamics of stock index and stock index futures returns in rational efficiently functioning markets the returns on stock index and stock index futures contracts should be perfectly contemporaneously correlated this study investigates the time series properties of 5 minute intraday returns of stock index and stock index futures contracts and finds that sp however the effect is not completely unidirectional with lagged stock index returns having a mild positive predictive impact on futures returns

revealed preferences between public expenditures and taxation cuts public sector choice abstract a survey was carried out in england and wales to provide information on how people would allocate a sum of money between increases in government spending and lowering taxes by means of a coupon scale questionnaire relatively new to this country and used for the first time to ascertain choice at the central and local government level we hoped to overcome the problem of getting people to reveal their true preferences statistical analysis of the data reveals some significant differences in responses

comparing static and dynamic estimates of behavioral responses to changes in family composition or income comparing static estimates of behavioral responses with dynamic estimates and using different time spans for the latter reveals striking differences in estimated effects of changing family composition income and wife s work these are interpreted to be the result of several things 1 bias in the cross section estimates from unmeasured and perhaps unmeasurable variables that do not affect the dynamic change data 2 lags in adjustment with static data being closer to long run effects and 3 different relative importance of errors in measuring the explanatory variables the effects of changing family composition appear to be less affected by any of these problems than are the estimated effects of changes in income or wife s work

tests of stability for variances and means of overnight intraday returns during bull and bear markets abstract this paper examines the behavior of overnight and intraday returns during and across bull and bear markets robust tests new to the finance literature are performed to examine the stability of both variability of returns and mean returns over time comparing bull and bear markets intraday returns are significantly more volatile during bear markets but no statistical difference in overnight returns is found variability of returns is significantly greater intraday than overnight during both bull and bear markets differences in mean returns between bull and bear markets are shown to occur primarily intraday rather than overnight implications for future studies of trading phenomena and return generating processes are presented

an econometric model of serial correlation and illiquidity in hedge fund returns the returns to hedge funds and other alternative investments are often highly serially correlated in sharp contrast to the returns of more traditional investment vehicles such as long only equity portfolios and mutual funds in this paper we explore several sources of such serial correlation and show that the most likely explanation is illiquidity exposure i e investments in securities that are not actively traded and for which market prices are not always readily available for portfolios of illiquid securities reported returns will tend to be smoother than true economic returns which will understate volatility and increase risk adjusted performance measures such as the sharpe ratio we propose an econometric model of illiquidity exposure and develop estimators for the smoothing prole as well as a smoothing adjusted sharpe ratio for a sample of 908 hedge funds drawn from the tass database we show that our estimated smoothing coecien ts vary considerably across hedge fund style categories and may be a useful proxy for quantifying illiquidity exposure

xetra efficiency evaluation and nasdaq modelling by kapsyn abstract in this paper we give an introduction to capital market synergetics a model enabling us to compute transaction costs and investigate the operating efficiency of a stock market s microstructure frankfurt s trading system xetra and nasdaq are currently implemented into the computer program kapsyn by using kapsyn we examine xetra s behaviour in different market scenarios particularly the designated sponsor s performance the empirical evidence of the kapsyn parameter setting chosen is validated connecting the parameter setting to economic data by using neural networks and analytical reasoning underlie the definition of market scenarios the designated sponsor s eminent importance in non liquid markets has been demonstrated very impressively finally nasdaq s transaction cost statistics are investigated in the above scenarios compared to xetra nasdaq exhibits minimal transaction costs for mid size trades while transaction costs for small and block trades are nearly 100 50 higher

working wives and food away from home the box cox double hurdle model household expenditures on food away from home are analyzed with the use of the bls 1989 consumer expenditure survey parameterization and distributional assumptions of cragg s double hurdle model are generalized for this purpose and the resulting model outperforms the more traditional ones results suggest households with working wives and those with higher income are more likely to consume food away from home and also to consume more than others wife s age and household size increase the conditional level of consumption education has conflicting effects on probability and conditional level of consumption

breakfast lunch and dinner expenditures away from home in the united states abstract this study investigates the differentiated effects of economic and socio demographic variables on food away from home fafh expenditures by type of meal among different types of households in the united states using data from the 2008 and 2009 consumer expenditure surveys the systems of expenditures on breakfast lunch and dinner are estimated with a multivariate sample selection procedure statistical significance of error correlations among equations justifies estimation of the sample selection systems income work hours race education geographic region and household composition are important determinants of fafh expenditures income contributes to fafh expenditures of all meal types implying that the future of fafh industry is tied to macroeconomic conditions more education is associated with increased expenditures for fafh lunch and dinner effects of the supplemental nutrition assistance program snap are negligible

day of the week effect on the paris bourse abstract we present evidence on the day of the week effect on a stock market with a particular settlement procedure the paris bourse a strong and persistent negative return is found on tuesdays a similar result was previously found for japan and australia the settlement procedure is shown to have an effect on the distribution of daily returns consistent with forward pricing theory it cannot explain the negative tuesday return after adjusting for this settlement effect the mean return on mondays is the largest in the week a result at odds with the evidence in the u s a

investigating household purchase timing decisions a conditional hazard function approach the purchase timing decision is an important component of the dynamics of a household s purchase behavior this decision is influenced by marketing and other variables and the modeling of this dependence has recently received attention in the literature in this paper we build on previous studies and develop a comprehensive stochastic model that incorporates the major factors influencing interpurchase times specifically we use a generalized version of cox s proportional hazard model to test among competing probability distributions for the interpurchase times while incorporating effects due to marketing variables observed household characteristics and unobserved heterogeneity across households the empirical finding from analyzing the iri coffee data suggests that the interpurchase times cannot be adequately described by probability distributions such as exponential erlang 2 or weibull the effects of unobserved heterogeneity are significant and they impact the estimates of the effects of the covariates we also find that a nonparametric procedure for estimating the effects of unobserved heterogeneity provides the best overall fit to the data and yields covariate estimates that are more consistent with prior expectations our model is validated by replicating the substantive empirical findings on an additional product category

revealed preferences for public goods applying a model of voter behavior most analyses of preferences for government supplied goods disregard the fact that in a democratic society these preferences are revealed by an individual choice the vote in this paper this is taken account of in a model explaining the dynamics in voting behavior in a multi party system the model assumes that voters may be categorized into k groups of individuals pursuing the same interests who remember how parties do in representing these interests given the level to which they are held responsible for government policy the model allows one to estimate party identification sensitiveness to economic performances time preference and relative preferences for public versus private goods all for each of the groups furthermore the model allows for an estimation of the level to which various parties are held responsible for government policies

the timing of repeat purchases of consumer durable goods the role of functional bases of consumer attitudes abstract in an attempt to bring consumer psychology theories into research on the timing of repurchase of consumer durables the authors suggest that attitude functions knowledge value expressive social adjustive and utilitarian can help explain and predict interpurchase intervals adopting an interactionist perspective the authors propose that the effect of the attitude functions is contingent on contextual factors which they theorize as the nature of the product along public private and luxury necessity dimensions and the nature of the decision forced or unforced purchase decision hypothesis testing is facilitated by survey data on actual purchase decisions and hazard models that incorporate individual heterogeneity the results support the suggested role of attitude functions in explaining and predicting interpurchase intervals and suggest means by which managers can position their products to shorten interpurchase intervals

the economics and politics of the structure of public expenditure the paper derives a complete system ofdemand equations for public consumptionexpenditures as the outcome of rationalbehaviour in a model where governmentmaximizes expected electoral support theallocation of expenditures is found todepend not only on the prices of publicservices and total expenditure and tosatisfy the constraints of demand theory which have been the focus of attention ofprevious empirical studies of theallocation of public expenditures but inaddition on the prices of privateconsumption goods the distribution ofvoter incomes and the expected change invoter support from varying the levels ofpublic provision

stock index futures mispricing profit opportunities or risk premia this paper reports empirical evidence on stock index futures pricing based on about four years of synchronous hourly data from the uk reported index values are based on firm quotes identified arbitrage opportunities are therefore actually exploitable and economically significant the analysis controls for cash market settlement procedures the results show that ex ante trading rules would have generated attractive profits after transaction costs and after the risks of dividend uncertainties marking to market and possible delays in execution are considered the far contract and the near contract tend to be mispriced in the same direction the mild tendency of futures to be overpriced in rising markets and underpriced in falling markets appears to be unimportant finally significant positive relationships are observed between the absolute magnitude of mispricing and time to maturity and between mispricing and index option implied volatility

trading frequency and event study test specification abstract we examine the effects of thin trading on the specification of event study tests simulations of upper and lower tail tests are reported with and without variance increases on the event date across levels of trading volume the traditional standardized test is misspecified for thinly traded samples if return variance is unlikely to increase then corrado s rank test provides the best specification and power with variance increases the rank test is misspecified the boehmer et al standardized cross sectional test event study methodology under conditions of event induced variance journal of financial economics 30 pp 253 272 is properly specified but not powerful for upper tailed tests lower tailed alternative hypotheses can best be evaluated using the generalized sign test

a diffusion model incorporating product benefits price income and information we start by assuming that a major benefit of many new durable products such as dishwashers and microwave ovens is time savings others such as vcrs also enhance the value of our leisure time using a household production framework we demonstrate that a utility maximizing individual will have a reservation price for the product which is a function of the product benefits and his wage rate by assuming that the wage rate has an extreme value distribution across the population we are able to derive for the aggregate process an income price dependent logistic adoption equation we then allow for the possibility that certain eligible consumers may delay their purchase of the product because they are unaware that it exists are suspicious of its quality or expect its price to fall unawareness uncertainty and hope for further price declines are assumed to decrease with the increase in the number of previous adopters the resulting diffusion model has the property that the product life cycle phenomenon can be explained jointly or separately by the income price process and the awareness uncertainty expectations process using data on household income on durable penetration within different income classes and on first purchase sales the aggregate diffusion model and its premises are tested and supported it is found that both the income price and awareness uncertainty expectations processes are at work however the dependence of the awareness uncertainty expectations delay process on the number of previous adopters e g word of mouth type effect exists only in certain product categories and is usually relatively weak it is demonstrated that if the word of mouth type effects are weak a price skimming strategy is optimal for a monopolist and also is likely to be implemented by oligopolists the sales forecasting implications of the model also are pursued

measuring true stock index value in the presence of infrequent trading based on the beveridge nelson 1981 decomposition of an arima process i present a measure of true stock index value that is not directly observable due to infrequent trading of stocks the technique is illustrated with daily observations of the russell 2000 index this new measure might well prove useful in studies of lead lag relationships between index derivatives and spot market and futures basis measurements

time use work and overlapping activities evidence from australia the overlapping of activities is an important dimension of time use that has previously received little attention in economic analysis most time use studies have looked only at primary activities ignoring the fact that individuals often perform two or more activities simultaneously this seriously underestimates the time spent on several economic activities such as childcare and housework which are also performed as secondary activities using a two adult household sub sample from the 1992 national australian time use survey this paper examines the incidence and determinants of overlapping activities among 3 966 adult male and female household members it first shows that inclusion of overlapping activities in time use measurements provides a better estimation of the economic contribution of individuals especially in non market production tobit models are then estimated to examine the effects of economic social and demographic factors on the incidence of overlapped work activity the findings which are found to be robust showed that gender household life cycle and composition education cultural norms employment status and level of income earnings influence the extent to which individuals particularly women perform secondary work activities conclusions are drawn in the final section of the paper copyright 2003 oxford university press

market microstructure and securities values evidence from the tel aviv stock exchange abstract this paper examines the value effects of improvements in the trading mechanism selected stocks on the tel aviv stock exchange were transferred gradually from a daily call auction to a mechanism where the call auction was followed by iterated continuous trading sessions this event was associated with a positive and permanent price appreciation the cumulative average market adjusted return over a period that started five days prior to the announcement and ended 30 days after the stocks started trading by the new method was approximately 5 5 in addition we find positive liquidity externalities spillovers across related stocks and improvements in the value discovery process due to the improved trading method finally there was a positive association between liquidity gains and price appreciation

explaining business cycles a multiple shock approach abstract aiyagari 1992 and prescott 1986 1991 claim that a large fraction of the variance of united states quarterly detrended real gnp is attributable to an unobservable shock to total factor productivity this paper argues that the importance of a productivity shock in explaining the variance of output is fundamentally indeterminate any model that is in accord with the several time series that make up united states macroeconomic data must feature multiple shocks that are correlated at all leads and lags sorting out the separate effects of these various shocks on a single variable such as real gnp is impossible we illustrate this argument using a multiple shock version of the king plosser rebelo 1988 benchmark real business cycle model

consumption durables exploring the order of acquisition after an overview of alternative methods for analysing the ownership of consumer durables a particular method is proposed drawn from the principles of social choice theory and ultimately leading to the method of ranking durables equivalent to the borda rule methods are also developed for calculating the uniformity of choice and for identifying differences in patterns of ownership across partitions of the sample

working wives and the marginal propensity to consume food away from home contrary to predictions from the new household economics theory and heuristic thought income earned by wives working full time did not increase the marginal propensity to consume food away from home tobit estimates of the same propensity from other income sources in married u s households in 1978 showed that income earned by part time working wives and children asset income and transfer payments increased this propensity above that from husband s labor income whites had higher expenditures higher marginal propensities to consume and lower income elasticities for food away from home than nonwhites

the composition of government expenditure economic conditions and preferences i introduction there are substantial variations among countries in their tax and expenditure policies even among developed democracies sharing similar economic and political regimes as discussed by tanzi 2000 and alesina and glaeser 2004 this study examines the question of why expenditure patterns differ among democratic countries using a sample of countries with a high democracy index section ii presents empirical evidence showing that the united states has a low ratio of expenditure on transfer payments to that on public goods despite its high income inequality scandinavian countries typically combine low inequality and much higher expenditure on transfer payments relative to public goods british commonwealth countries have higher income inequality than scandinavian countries and yet a lower ratio of transfer payments to public goods expenditure these findings seem inconsistent with the prediction of a large theoretical literature more basic income inequality leads to a larger extent of redistributive expenditure 1 however the observed partial relationship between the expenditure composition and income inequality is possibly obscured by many other factors reflecting differences in economic and demographic conditions or cultural differences across countries see lind 2005 and alesina and glaeser 2004 in order to attempt to understand the way in which cultural factors and economic conditions may combine to influence the composition of expenditure this paper examines the division of expenditure between public goods and a transfer payment under majority voting in the context of an overlapping generations model by taking a growth context and focusing on the expenditure composition for a given tax rate the model allows for a range of factors which may contribute to cross country variations in expenditure compositions such as income and population growth rates and the discount factor in particular cultural factors are captured by a parameter in the utility function reflecting individuals preference for public goods relative to private goods consumption direct independent evidence regarding preferences for public goods is extremely difficult to obtain in view of well known problems of preference revelation mechanisms a wide range of studies however take such differences as their starting point see for example haufler 1996 the transfer payment in the model is referred to as a pension as it is received in the second period of life 2 however it may be thought of more broadly as a standard type of income transfer as it involves in the present overlapping generations framework a decision regarding income shifting between periods within the life cycle as well as intra and intergenerational redistribution members of each cohort are considered to vote on their desired pension during the retirement period on the understanding that during the working period each cohort finances the expenditure previously agreed by the preceding cohort and voters are aware of the nature of the government budget constraint therefore there is a social contract in which each generation in the retirement period is able to benefit from the income and population growth of the following generation the condition under which the social contract is supported by a majority of the members of any cohort involves extending the condition obtained by aaron 1966 and samuelson 1958 the model yields a closed form solution for the majority choice of the expenditure ratio defined as the ratio of transfer payments to public goods expenditure consistent with previous theoretical literature the model predicts a positive relationship between income inequality and the expenditure ratio a numerical exercise is then implemented to examine the sensitivity of the expenditure ratio to variations in model primitives where baseline parameter values are calibrated to the dataset for a group of democratic countries

the survival of the welfare state this paper provides an analytical characterization of markov perfect equilibria in a model with repeated voting where agents vote over distortionary income redistribution a key result is that the future constituency for redistributive policies depends positively on current redistribution since this affects both private investments and the future distribution of voters the model features multiple equilibria in some equilibria positive redistribution persists forever in other equilibria even a majority of beneficiaries of redistribution vote strategically so as to induce the end of the welfare state next period skill biased technical change makes the survival of the welfare state less likely

durables and wives employment yet again the literature examining the relationship between consumer durables expenditures and wives employment is analyzed several deficiencies in the literature are corrected in a revised model that is estimated with data from the 1977 1978 survey of consumer expenditures this article concludes that durables expenditures and wives employment time are complements

determinants of credit card accounts an application of tobit analysis tobit analysis was used to examine the relative importance of household characteristics in determining the number of credit card accounts per household results supported theoretical predictions that households whose time was the most valuable would be most likely to have credit card accounts this study suggests that tobit analysis is useful for a broad range of consumer behavior studies

consumer price and promotion expectations an experimental study the authors report results from a controlled experiment designed to investigate the impact of a brand s price promotion frequency and the depth of promotional price discounts on the price consumers

on the size of u s government political economy in the neoclassical growth model we study a dynamic version of meltzer and richard s median voter model of the size of government taxes are proportional to total income and they are redistributed as equal lump sum transfers voting takes place periodically over time and each consumer votes for the tax rate that maximizes his equilibrium utility we calibrate the model to u s data key elements in the calibration are the income and wealth distribution and the parameters governing the leisure and consumption choices the total size of transfers predicted by our political economy model is quite close to the size of transfers in the data

median voter equilibria in the neoclassical growth model under aggregation we study a dynamic version of meltzer and richard s median voter model where agents differ in wealth taxes are proportional to income and are redistributed as equal lump sum transfers voting occurs every period and each consumer votes for the tax that maximizes his welfare we characterize time consistent markov perfect equilibria twofold first restricting utility classes we show that the economy s aggregate state is mean and median wealth second we derive the median voter s first order condition interpreting it as a tradeoff between distortions and net wealth transfers our method for solving the steady state relies on a polynomial expansion around the steady state

a high tech product market share model with customer expectations in a product category based on dynamic technology new products enter the market in rapid succession and the competitive situation changes almost daily because technological features of available products tend to improve while prices tend to decline customers develop expectations that may influence their purchase decisions we model the impact of customer expectations regarding price and technology on product market share in the personal computer industry finding significant nonlinear effects of both these effects are observed when actual product price and or technology differ from expectations by a threshold amount our results suggest implementable implications for high tech product managers in particular price and technology should meet but not exceed customer expectations this does not mean that managers should strive for mediocrity rather continuous improvement should be implemented so that product development efforts lead customer expectations

buying time and saving time strategies for managing household production time buying strategies used more often by employed wife families than nonemployed wife families were purchase of child care meals away from home and disposable diapers time saving strategies used by employed wives were preparing fewer meals at home reduced time in household production and reduced time in leisure wife s employment made no difference in time spent in household production by other family members

determinants of household expenditures for services data from the bureau of labor statistics consumer expenditure surveys were used to investigate factors influencing household expenditures for services in the united states there were significant differences between families with full time and part time working wives in expenditures on child care food away from home and total services household production variables had a significant impact on service expenditures in most instances while the effects of other variables such as family life cycle education race and geographic location varied by service category and employment status of wife

democratic public good provision this paper analyzes an overlapping generation model of redistribution and public good provision under repeated voting expenditures are financed through age dependent taxation that distorts human capital investment taxes redistribute income both across skill groups and across generations we focus on politico economic markov equilibria and contrast these with the ramsey allocation under commitment the model features indeterminate equilibria with a key role of forward looking strategic voting due to the lack of commitment to future policies the tax burden may be on the wrong side of the dynamic laffer curve moreover restrictions on government policies can in some cases be welfare improving

the impact of reference price effects on the profitability of price promotions this paper investigates the impact of reference price effects on retailer price promotions and describes why these effects can make promoting profitable first we analyze the profit impact of reference price effects generated by a single period of promotion the promotion can increase profit if the gain that these effects create in the promotion period outweighs the loss they create in future periods we then describe how retailers can estimate the optimal strategy of recurring promotions that maximizes profits from reference price effects over a time horizon examples of such strategies are presented for a retailer selling a national brand of peanut butter we obtain insights into how promotion prices timing and profits are affected by changes in costs interest rates consumers reactions to reference price effects and error in estimates used in the model the retailer s optimal reaction to a trade deal is also examined this strategy involves a phase of increased promotion activity sandwiched between phases of decreased activity we explain these results using the effects described in the single period model

incorporating consumer price expectations in diffusion models in this paper the sensitivity of the optimal price path of a new durable product to the price expectations of consumers is examined consumers enter the market every period in a diffusion type framework during the initial periods more consumers enter the market due to word of mouth influence but in the latter periods saturation effects set in the entering set of cohorts form expectations about future prices and in a stable equilibrium these expectations are fulfilled it is shown that the price path is cyclical with the following properties at the beginning of the cycle the price is at its highest level it falls monotonically over time reaching a low price at the end of the cycle equal to the reservation price of the consumers willing to pay less the cycle lengths are not equal the sensitivity of the optimal price path to model parameters is explored through a numerical procedure

unemployment insurance and unemployment spells this paper tests the effects of the level and length of unemployment insurance benefits on unemployment durations the paper particularly studies individual behavior during the weeks just prior to when benefits lapse higher unemployment insurance benefits are found to have a strong negative effect on the probability of leaving unemployment however the probability of leaving unemployment rises dramatically just prior to when benefits lapse individual data are used with accurate information of spell durations and the level and length of benefits the semiparametric estimation techniques used in the paper yield more plausible estimates than conventional approaches and provide useful diagnostics copyright 1990 by the econometric society

chapter 9 econometric and time series market response models publisher summary marketing has seen a rapid expansion in the widespread use of quantitative methods correlation and regression analysis were among the first techniques used as marketing research emerged as a discipline after world war ii in the early 1970s regression analysis became econometrics simultaneous equation systems could be estimated almost as easily as single regression equations while econometrics as a whole continues to flourish as new and more sophisticated estimation techniques and associated computer software have become available simultaneous equation systems have not become widely prevalent the dynamic structure of marketing variables themselves is addressed in the chapter followed by discussions of leads and lags among marketing variables and the assessment of the direction of causality dynamic properties of sales response functions have been discussed in more detail marketing generalizations that have been uncovered as well as empirical evidence on the shape of the sales response function is reported

the dynamics of government abstract we model income redistribution with dynamic distortions as determined by rational voting without commitment among individuals of different types and income realizations we find that redistribution is too persistent relative to that chosen by a planner with commitment the difference is larger the lower is the political influence of young agents the lower is the altruistic concern for future generations and the lower is risk aversion furthermore there tends to be too much redistribution in the political equilibrium finally smooth preference aggregation as under probabilistic voting produces less persistence and does not admit multiple equilibria which occur under majority voting aggregation

the size and composition of government expenditure abstract this paper tests several leading hypotheses on determinants of government expenditure the purpose is to avoid omitted variables bias by testing the prominent theories in a comprehensive specification to identify persistent puzzles for the current set of theories and to explore those puzzles in greater depth by looking at the composition of government expenditure and the level of government at which it takes place as well as its magnitude using government financial statistics data from the imf covering over 100 countries from 1970 2000 i look at cross sectional and inter temporal variation in government expenditure and both individual categories of expenditure such as defense education health care and different levels of government central and local among other results i find a new explanation for wagner s law widespread evidence that preference heterogeneity leads to decentralization rather than outright decreases in expenditures that a great deal of the expenditure associated with increased trade openness is not in categories that explicitly insure for risk and evidence that both political access and income inequality affect the extent of social insurance

chapter 11 pricing models in marketing publisher summary this chapter brings together a set of diverse efforts in the recent literature on the modeling of price decisions and related questions in marketing there has been an impressive growth in the array of topics investigated in the literature various trends in the development of pricing models are evident from the foregoing review first one trend has been to develop theoretical models to describe observed pricing strategies in the marketplace and to derive conditions under which certain strategies are optimal this trend is clearly evident when one considers the area of dynamic pricing models another trend is an attempt to develop pricing models in which certain aspects of consumer behavior e g asymmetric response to price increases versus price decreases are incorporated this development is quite recent and does offer a large potential a third dominant direction is the use of game theoretic models for developing equilibrium pricing strategies

autocorrelation of daily index returns intraday to intraday versus close to close intervals abstract first order autocorrelation coefficients of 1 daily equally weighted open to open returns 2 daily equally weighted intraday to intraday returns terminating at each of 23 successive 15 minute intervals of the trading day beginning at 10 15 a m and 3 daily equally weighted and value weighted close to close returns interval 24 are examined a number of findings concerning the behavior of these autocorrelations are reported first order autocorrelation is shown to follow a crude u shaped pattern when plotted against the time of the trading day but there is no significant difference in the behavior of autocorrelations based on open to open returns and 24 hour returns terminating at 10 15 a m evidence that intraday patterns in autocorrelation cannot be explained fully by trading delays also is presented

income distribution and tax structure empirical test of the meltzer richard hypothesis abstract the meltzer richard hypothesis that more unequal income distribution will create a majority for more redistribution has generated much research but little empirical support the empirical literature has concentrated on cross country studies and the size of the public sector and the results broadly do not indicate more redistribution with more inequality this analysis suggests that the hypothesis should be investigated in a more homogenous setting with comparable institutions and with an explicit decision about redistribution here tax structure new data on poll tax and property tax in decentralized government in norway are exploited we show how the multi dimensional decision can be analyzed as majority rule assuming intermediate preferences in the econometric analysis instruments are used to account for endogeneity of income level and income distribution the estimated model supports the understanding that more unequal income distribution implies a shift in the tax burden from poll tax to property taxes and thereby gives more redistribution

on intertemporal selfishness how the perceived instability of identity underlies impatient consumption how does the anticipated connectedness between one s current and future identity help explain impatience in intertemporal preferences the less consumers are closely connected psychologically to their future selves the less willing they will be to forgo immediate benefits in order to ensure larger deferred benefits to be received by that future self when consumers measured or manipulated sense of continuity with their future selves is lower they accept smaller sooner rewards wait less in order to save money on a purchase require a larger premium to delay receiving a gift card and have lower long term discount rates

credit cards as lifestyle facilitators credit cards are an increasingly essential technology but they carry with them the paradoxical capacity to propel consumers along lifestyle trajectories of marketplace freedom or constraint we analyze accounts provided by consumers credit counselors and participants in a credit counseling seminar in order to develop a differentiated theory of lifestyle facilitation through credit card practice the skills and tastes expressed by credit card practice help distinguish between the lifestyles of those with higher cultural capital relative to those with lower cultural capital differences in lifestyle regulation practice are posited to originate in cultural discourses related to entitlement and frugality

wives labor force behavior and family consumption patterns in 1940 the labor force participation rate for married women husband present was 14 percent by 1970 it had increased 26 percentage points to 40 percent the supply and demand variables associated with this increase have been widely investigated however there has been ve ry little research on the economic effects of wives labor force participation see r agarwala and j drinkwater margaret carroll robert holbrook and frank stafford lucy mallan and jacob mincer this paper analyzes two economic effects the effect on the ratio of consumption to income ciy and the effect on the ratio of durable goods purchases to income durly the primary question addressed is controlling for total family income and several other variables what are the differences if any in the ratios of ciy and durly for working wife w w and nonworking wife n w w families looked at in another way the question may be rephrased how do w w families use wives income

expenditure pattern differentials between one earner and dual earner households 1972 1973 and 1984 the impact of women s changing work roles on household expenditures by married couples is analyzed for 1972 1973 and 1984 utilizing data from the consumer expenditure survey cex one earner households with a non working wife nww are compared at the same level of after tax income to dual earner households in which the wife works part time pww and to those with wives working full time fww the analysis indicates that expenditure shares are fairly consistent among types of households over time in terms of wife s work status and income levels and that income is the most important determinant of expenditures

asymmetric reference price effects and dynamic pricing policies we consider a group of frequently purchased consumer brands which are partial substitutes and examine two situations the first where the group of brands is managed by a retailer and second where the brands compete in an oligopoly we assume that demand is a function of actual prices and reference prices and develop optimal dynamic pricing policies for each situation in addition to researchers studying pricing strategy our results may interest retailers choosing between hi lo pricing and an everyday low price and manufacturers assessing whether to follow procter gamble s lead and replace a policy of funding consumer price reductions through trade deals with a constant wholesale price a reference price is an anchoring level formed by customers based on the pricing environment the literature suggests that demand for a brand depends not only on the brand price but also whether the brand price is greater than the reference price a perceived loss or is less than it a perceived gain the responses to gains and losses are asymmetric broadly speaking we find that when enough consumers weigh gains more than losses the optimal pricing policy is cyclical likewise when they weigh losses more than gains a constant price is optimal thus we provide a rationale for dynamic pricing which is quite distinct from the three explanations previously offered 1 decreasing unit variable costs due to learning effects 2 the transfer of inventory to consumers who face lower inventory holding costs than do retailers and 3 competitive effects our explanations apply even when the other explanations do not i e in mature product categories where learning effects are minimal when retailer inventories are minimized through the use of just in time policies and when competitive effects do not exist as in a monopoly greenleaf 1995 has shown numerically that in the presence of reference price effects the optimal pricing policy for a monopolist can be cyclical we first analytically extend greenleaf s result to a monopolist with a constant cost of goods facing a homogeneous market where all customers either weigh gains more than losses or vice versa using this building block we examine a monopolist retailer managing multiple brands we assume that demand is a linear function of prices of multiple brands and together with an expression which reflects the reference price effect further we assume that the retailer maximizes average profit per period next we analyze a duopoly and extend the results to an oligopoly we assume that the manufacturers are able to set the retail prices as in an integrated channel here we retain the same demand function as for the retailer and derive markov perfect nash equilibria we use two alternative processes of reference price formation the exponential smoothed es past price process which is frequently used in the literature and for the multi brand situations the recently proposed reference brand rb process hardie johnson and fader 1993 in the latter the reference price is the current price of the last brand bought the reference brand we adapt the individual level rb formulation in hardie et al to an aggregate demand specification for the es process we obtain most results analytically for the rb process we use simulation finally we extend our results to a population with two customer segments segment 1 which weighs gains more than losses and segment 2 which does the opposite i e is loss averse when the market consists exclusively of segment 1 customers and es is the reference price process we find that prices are cyclical in all cases analyzed i e for a monopoly a monopolist retailer managing multiple brands a duopoly and an oligopoly if the rb formulation is the underlying process a monopolist retailer managing two brands uses cyclical prices but in a duopoly the equilibrium solution is for the brands to maintain constant prices when all customers belong to segment 2 i e they are loss averse constant prices are optimal in all cases for both reference price formulations when the population consists of both segment 1 and segment 2 and the es process applies we develop a sufficient condition for cyclical pricing policies to be optimal the condition is expressed in terms of the proportion of the two segment sizes the absolute difference between the gain and loss parameters of each segment and their respective exponential smoothing constants interestingly for reasonable values of the latter two factors cyclical policies are optimal even when the proportion of segment 1 is quite small similar magnitudes are obtained numerically for the rb case

voting inequality and redistribution this paper surveys models of voting on redistribution under reason able assumptions the baseline model produces an equilibrium with the extent of redistributive taxation chosen by the median income earner if the median is poorer than average redistribution is from rich to poor and increasing inequality increases redistribution however under different assumptions about the economic environment redistribution may not be simply rich to poor and inequality need not increase redistribution several lines of argument are presented in particular political participation public provision of private goods public pensions and tax avoidance or evasion

the value of time spent in price comparison shopping survey and experimental evidence the value that consumers place on time spent in price comparison shopping is central to the economics of information theory and models of consumers search behavior yet few empirical studies have examined consumers subjective value of time building on gary becker s work this article presents two tests of a model of the subjective value of time in an effort to explain consumers subjective value of time while they are price comparison shopping the model introduces perceived enjoyment of shopping as a new explanatory variable the findings reveal that respondents incorporate both wage rates and perceived enjoyment of price comparison shopping into their subjective value of time

multiple discreteness and product differentiation demand for carbonated soft drinks for several of the largest supermarket product categories such as carbonated soft drinks canned soups ready to eat cereals and cookies consumers regularly purchase assortments of products within the category consumers often purchase multiple products and multiple units of each alternative selected on a given trip this multiple discreteness violates the single unit purchase assumption of multinomial logit and probit models the misspecification of such demand models in categories exhibiting multiple discreteness would produce incorrect measures of consumer response to marketing mix variables in studying product strategy these models would lead to misleading managerial conclusions we use an alternative microeconomic model of demand for categories that exhibit the multiple discreteness problem recognizing the separation between the time of purchase and the time of consumption we model consumers purchasing bundles of goods in anticipation of a stream of consumption occasions before the next trip we apply the model to a panel of household purchases for carbonated soft drinks

monopolist pricing with dynamic demand and production cost this paper deals with pricing of a new product over time by a monopolist who maximizes the discounted profit stream the interdependency of cost and demand on cumulative production makes the problem inherently dynamic cost is assumed to be declining with cumulative production learning curve effect while demand is a function of price and cumulative sales representing word of mouth and saturation effects the paper addresses this problem in a general framework that includes several previous results as special cases and provides new insights in other situations while the learning curve and word of mouth effect cause prices to be lower than the price that maximizes immediate revenues the saturation factor has the opposite effect the price path over time is affected by these factors and the interest rate we characterize the price path under several different situations and interpret the results for policy guidelines