Valuing the Health Benefits of a Novel Functional Food

Awareness of the link between diet and health has led to an interest from consumers, the food industry, and policymakers in the health properties of foods. Food industry innovations are emerging that enhance the health attributes of foods. Recent scientific evidence has linked the consumption of foods high in trans fatty acids with elevated cholesterol levels and a higher incidence of coronary heart disease. Foods that reduce the risk of chronic diseases have potential social welfare benefits. This article values the potential health benefits of a healthy food: a trans fat‐free canola oil. Using a range of assumptions about the extent to which a trans fat‐free canola oil will substitute for existing oils, the paper shows how two alternative methods of computing reductions in the cost of illness reveal nontrivial benefits to society. Policy implications and suggestions for further research are discussed. La sensibilisation au lien qui existe entre l'alimentation et la santé a suscité chez les consommateurs, l'industrie alimentaire et les décideurs un intérêt pour les propriétés des aliments pour la santé. L'industrie alimentaire ne cesse d'innover afin d'accroître les attributs des aliments pour la santé. Des preuves scientifiques récentes ont établi un lien entre la consommation d'aliments riches en gras trans, des taux de cholestérol élevés et une incidence accrue de coronaropathie. Les aliments qui diminuent les risques de maladies chroniques ont des bienfaits potentiels sur le bien‐être social. Le présent article porte sur l'évaluation des bienfaits potentiels d'un aliment sain, soit une huile de canola sans gras trans. À l'aide de diverses hypothèses quant au degré de remplacement des huiles existantes par l'huile de canola, le présent article montre de quelle fa¸on deux méthodes de calcul des diminutions du coût de la maladie révèlent des avantages non négligeables pour la société. Nous discutons des incidences politiques et présentons des suggestions de recherche ultérieure.     

The economic burden of end-of-life care in metastatic breast cancer

Objective: To assess end-of-life (EOL) total healthcare costs and resource utilization during the last 6 months of claims follow-up among patients with metastatic breast cancer (MBC) who received systemic anti-neoplastic therapy.

Methods: Newly diagnosed females with MBC initiating treatment January 1, 2003–June 30, 2011 were identified in a large commercial claims database. Two cohorts were defined based on a proxy measure for EOL 1 month prior to the end of last recorded follow-up within the study period: patients who were assumed dead at end of claims follow-up (EOL cohort) and patients who were alive (no-end-of-life [NEOL] cohort). Proxy measures for EOL were obtained from published literature and clinical expert opinion. Cost and resource utilization were evaluated for the 6 months prior to end of claims follow-up. Baseline variables, resource utilization, and costs were compared between cohorts with univariate statistical tests. Adjusted relative risks were calculated for resource utilization measures. A covariate-adjusted generalized linear model evaluated 6-month total healthcare costs.

Results: Of the 3,878 females included, 18.5% (n?=?718) met the criteria for EOL. Mean observational time (MBC onset to end of claims follow-up) was shorter for the EOL cohort (EOL, 32 months vs NEOL, 35 months; p?p?2 times higher in the EOL cohort (p?Conclusions: Potential EOL presented a greater economic burden in the 6 months prior to death. EOL month-to-month costs increased precipitously in the last 2 months of life and were driven by acute inpatient care.     

Engagement and subjective well‐being in alternative food networks: The case of Hungary

An alternative food network (AFN) is a comprehensive concept that aims to capture new and socially innovative networks of consumers and producers in short supply chains. The objective of this study is to understand the relationship of users to AFNs using subjective well‐being (SWB), which is a relevant concept connected to eating and alternative consumption. This paper explores the engagement and nature of SWB by qualitative data collected through in‐depth interviews of new and experienced members of different AFNs. The results suggest that membership in AFNs is able to increase SWB, while certain characteristics of these networks can also decrease it. Differences according to the level of engagement have been found for the studied AFNs. The results contribute to a better understanding of consumers in alternative consumption networks and also indicate some of the limitations of this business model.     

Fixed margin price undercutting: An adequate entry strategy in a market with switching costs?

Purpose We try to determine the best strategy for entering a market with switching costs that is initially served by a monopolistic incumbent. Findings We show that an offer to undercut the incumbent by a fixed margin (FM) dominates traditional entry with a binding price offer (BO) as this conditional pricing strategy restrains the ability of the incumbent to block entry by limit pricing. Combining FM with a price ceiling (PC) insures customers against future price increases and turns out to be optimal for markets with elastic demand as long as cost uncertainty is not an issue. Conclusion Using a more elaborate entry strategy may facilitate entry in markets with switching costs. However, as these strategies may decrease welfare, they should be closely monitored by antitrust authorities.     

Estimating the health care savings from trans fat-free canola in Canada

Growing scientific evidence links consumption of trans fatty acids in the diet to elevated levels of cholesterol and therefore to coronary heart disease. Coronary heart disease is the single largest contributor to health care costs in Canada (both direct medical costs and indirect costs in the form of lost productivity). As with many industrialized nations, rising public health care costs are a major public policy concern in Canada. The major source of trans fats is hydrogenated vegetable oils and processed food products. New canola varieties are emerging which enable the production of canola oils that are virtually trans fat-free. This paper evaluates the potential savings in public health care costs from a trans fat-free canola oil. Using four scenarios and conservative assumptions, the paper estimates non-trivial potential health cost savings in the range of Cdn$280 million to Cdn$1.09 billion annually. A number of policy implications are discussed.     

The Distributional Implications of Income Under‐Reporting in Hungary*

The ability and inclination of specific social groups to evade tax vary widely, and this leads to considerable variation in the actual tax burden on individuals with similar levels of income. Thus, ignoring tax evasion can be seriously misleading in terms of the distributive and fiscal effects of the tax system. This paper estimates the distributional implications of income tax evasion in Hungary, based on a random sample of the administrative tax records of nearly 230,000 individuals. Gross incomes declared in the administrative tax returns are compared with incomes stated in a nationally representative household budget survey. Our estimates show that the average rate of underreporting is 9–13 per cent, though this conceals a big difference between the self‐employed (who hide the greater part of their income) and employees. The estimates are likely to be lower bounds. These rates are used in a tax– benefit microsimulation model to calculate the fiscal and distributional implications of under‐reporting. Tax evasion reduces households' personal income tax payments by about 16–20 per cent. While the poverty rate increases only slightly, income inequality rises significantly, suggesting that high‐income households tend to evade tax proportionately more. Finally, we find that tax evasion largely reduces the progressivity of the tax system.     

Auctioning Risky Conservation Contracts

Conservation auctions have the potential to increase the efficiency of payments to farmers to adopt conservation-friendly management practices by fostering competition among them. The literature considers bidders that have complete information about the costs of adoption and optimal bidding behavior reflects this information advantage. Farmers seek information rents and bids decrease when risk aversion increases because farmers are more averse to losing the auction. We contribute to the literature by allowing for cost risk. Our paper shows that farmers must balance the risk of losing the auction (thus foregoing information rent) with the risk of submitting a bid that is not high enough to pay the costs of adopting conservation practices (thus incurring losses). We design an experiment to trade off these two risks and examine how risk aversion affects bidding behavior when participants face different sources and levels of risk. Our experiment contributes to a small literature on experimental auctions with risky product valuations. We find that participants decrease their bids as risk aversion increases, even in auctions with cost risk, suggesting that the risk of losing the auction dominates. These findings uncover new challenges for the practical implementation of conservation auctions as an efficient policy instrument.