Estimating the true cost of living for households with different incomes using data from Taiwan

This empirical study investigates why the true costs of living for different income groups in Taiwan as measured by the superlative Törnqvist price index have grown dissimilarly over the sample period. Specifically, it shows that using the aggregate Cost of Living (COL) estimates for the entire households as is commonly practiced would produce noticeable group bias effect in measurement. Also the magnitude of the commodity substitution bias in the conventional Consumer Price Index (CPI) is found to be positively related to household income in general. Because of the presence of these two biases, the true COL for households belonging to the two ends of the income spectrum is found to be over-estimated. This article is therefore in full agreement with Arrow's proposition that an alternative and separate set of price index be constructed.     

Managing the cost of specialty pharmaceuticals

The cost of specialty pharmaceuticals is a significant driver of increased costs in the delivery of ambulatory care. This expense is expected to increase disproportionately as an increased number of specialty pharmaceuticals available to treat rare, complex, or chronic diseases enter the market. Ambulatory practice managers must plan for these increased expenditures in a fiscally sound manner. The department of medicine at University Hospitals of Cleveland has developed a comprehensive system of checks and balances for managing specialty pharmaceuticals. This system includes working closely with providers and payers, underpinned with sound business planning techniques.     

The social cost of living index

Household cost of living indexes reflect household preferences; analogous indexes for groups of households require a corresponding concept of group preferences. In this paper I investigate the ‘social cost of living index’, a group index based on the Bergson-Samuelson social welfare function. I first define the index and examine its properties under the assumption that the investigator constructing it expresses his distributional judgments in an explicit Bergson- Samuelson social welfare function; I then examine the ‘maximizing society’ and the ‘independent society’, two cases in which the index can be constructed from the information contained in the market demand functions. In these two cases a Laspeyres index (i.e. the fixed weight index based on the reference consumption pattern) is an upper bound on the exact social cost of living index. In general, however, the assumptions required to place bounds on the social cost of living index are much more likely to be satisfied than those required to place analogous bounds on a household's cost of living index.     

Discontinuities in genetic engineering for pharmaceuticals? firms jumps and lock-in in systems of Innovation

This pape criticizes the concept of 'technological discontinuities'. It argues that the concept is misleading when the skills and knowledge of an indusry are composed of multiple rather than single core technologies. In cases such as the use of genetic engineering as the basis of production in pharmaceuticals, both existing pharmaceutical firms and new biotech firms integrate the new techniques into existing indusrial practice. The radical tecnology both enhances and destroys existing knowledge; the key to survival has been integration. Both existing and new firms have had the possibility of integrating multiple core technologies, but firms have been able to do so in different ways. Some existing firms could jump over to the radically new ‘technological trajectory’, by combining their creation of new competencies through in-house R&D with their access to novelty through relations with external agents in systems of innovation.     

Discontinuities in genetic engineering for pharmaceuticals? firms jumps and lock-in in systems of Innovation

This pape criticizes the concept of 'technological discontinuities'. It argues that the concept is misleading when the skills and knowledge of an indusry are composed of multiple rather than single core technologies. In cases such as the use of genetic engineering as the basis of production in pharmaceuticals, both existing pharmaceutical firms and new biotech firms integrate the new techniques into existing indusrial practice. The radical tecnology both enhances and destroys existing knowledge; the key to survival has been integration. Both existing and new firms have had the possibility of integrating multiple core technologies, but firms have been able to do so in different ways. Some existing firms could jump over to the radically new 'technological trajectory', by combining their creation of new competencies through in-house R&D with their access to novelty through relations with external agents in systems of innovation.     

A cost of living index incorporating a network effect

This paper constructs a cost of living index (COLI) that incorporates a network effect. While in this instance the application is to the telecommunications sector, the COLI are applicable more generally to network industries. The COLI permit valid welfare comparisons to be made by individual, region and country. Illustrative COLI estimates are provided for selected OECD member country telecommunications market data.     

Using food prices and consumption to examine Chinese cost of living

This paper considers two approaches to examining potential bias in China's consumer price index: (i) inferring true changes in cost of living from consumer behaviour; and (ii) creating alternative price indices to compare with official indices. For (i), our semi‐parametric estimates agree with the recent finding of a large understatement in increases to the true cost of living. For (ii), we focus on food prices and explore potential causes of bias. We find some evidence of a new‐good bias. China's large‐scale migration also causes changes in the cost of living that are not reflected in the consumer price index.     

The treatment of ‘quality’ in the cost of living index

This paper develops the implications of cost of living index theory for measuring the impact of changes in the availability and prices of goods on a household's welfare. It considers both the ‘goods approach’, which treats each variety as a separate entity, and two characteristics approaches: ‘L-characteristics’ and ‘H-characteristics’. L-characteristics are Lancaster's ‘linear and additive’ specification; H-characteristics are Houthakker's ‘heterogeneous’ specification in which the household consumes only a single variety of each product. The paper concludes by discussing the implications of the theory for actual index number construction and relating it to the literature on ‘quality’ and ‘hedonic indexes’.     

Specialty pharmaceuticals and the quest for better outcomes

Over the past decade, the healthcare system has seen significant growth in the number of products, pathways, and modes of treatment administration for a number of costly conditions. Many of these products are biologic agents, classified as specialty pharmaceuticals, and are distributed through specialty pharmacies. The increasing use of these expensive medications and their growing costs raise the simple question, can payers and purchasers afford to keep doing business as usual? In addition, confusion exists as to what “outcomes” are relevant for these conditions treated using specialty medications. Available information on outcomes, treatments, and pathways from multiple sources can overload clinicians and the treatment team, making it difficult to select – and receive reimbursement for – the most appropriate regimens. This article offers an approach to understanding some of the unique challenges posed in evaluating the value of specialty pharmaceuticals.     

Financial systems and the cost channel transmission of monetary policy shocks

We study the role of financial systems for the cost channel transmission of monetary policy in a calibrated business cycle model. We characterize financial systems by the share of bank-dependent firms and by the degree of the pass-through from policy to bank lending rates, for which we provide empirical estimates for the euro area and the US. For plausible calibrations of the dynamics of the lending rate we find that the cost effects directly related to interest rate movements have only a limited effect on the transmission mechanism.     

Estimating spatial differences in the Brazilian cost of living with household location choices

This paper uses a model of optimal household residential decisions to construct a comprehensive “true” spatial cost of living index with readily available Brazilian census data. We find evidence of a decreasing or U-shaped relationship (differing with education level and region) between the cost of living and urbanization, suggesting that both market disintegration and congestion play roles in raising costs. Controlling for spatial differences in the cost of living is shown to have important consequences for the determinants of poverty and (contrary to many previous results) to increase income inequality.     

Did the cost of living in Canada increase faster for the rich during the period 1950–1980?

The paper computes the approximate true cost of living indexes from the time series data on price and quantity of nine broadly defined goods and services to show that the cost of living increased faster for the rich in Canada during the three decades. This is due mainly to an increase in the prices of “luxury” goods and services relative to “necessity” goods and services. These conclusions are almost identical to those of several other studies which utilize a different framework and a different time period for analysis.     

Using the cost function to generate Marshallian demand systems

Limited data means that prior structure is needed when working with large demand systems. The cost function is a convenient vehicle for generating demand systems incorporating such structure. While the cost function directly yields Hicksian demand functions they will not usually have an explicit representation as Marshallian demand equations i.e. in terms of the observable variables. With fast hardware and modern software, however, this need not hinder the estimation of the (implied) Marshallian demand equations. This paper develops the formal theory for using cost functions in this context, and reports on initial trials on the operational feasibility of the method. First version received: September 1997/final version accepted: July 1999     

Growth econometrics for agnostics and true believers

The issue of model uncertainty is central to the empirical study of economic growth. Many recent papers use Bayesian Model Averaging to address model uncertainty, but (Ciccone and Jarociński, 2010) have questioned the approach on theoretical and empirical grounds. They argue that a standard ‘agnostic’ approach is too sensitive to small changes in the dependent variable, such as those associated with different vintages of the Penn World Table (PWT). This paper revisits their theoretical arguments and empirical illustration, drawing on more recent vintages of the PWT, and introducing an approach that limits the degree of agnosticism.     

Using Engel curves to estimate bias in the Canadian CPI as a cost of living index

Abstract.  Semiparametric Engel curves are used to infer bias in the Canadian CPI as a Cost of Living Index. The budget share of food has long been used as an indicator of welfare. We compare households with the same levels of CPI deflated total expenditure over the period 1978–2000. Differences in the expenditure share of food are attributed to the CPI failing to capture changes in costs of living. We employ a novel econometric approach using a single index penalized linear spline model. Over the period, we find that the CPI overstated changes in the cost of living between 1.33 and 1.86% for the four household types considered. JEL classification: D1, C1     

Conformity and the Demand for Environmental Goods

The existing literature on eco-labeling and green consumerism has been framed within a classical market context where price and quality are the drivers of consumer choice. However, it seems possible that consumers are also concerned about the choices made by other consumers. In fact, it is unclear that people’s consumption decisions are made independently of social context. For instance, under the desire to conform to certain social norms—or in the presence of status concerns—some individuals may be willing to pay a higher price premium for green products the more widespread green consumerism is in society. We test this hypothesis using a choice experiment where the respondents were asked to choose among coffee products varying with respect to their share of ecological beans, share of fair trade beans, and price. Three treatments were used, differing only in the information given about the choices made by other consumers. We find different responses to the treatments across individuals and we can only confirm our hypothesis of conformity for women, although men appear to have stronger preferences for ecological coffee than women have.     

需求价格弹性、销售收益和企业利润的关系研究：基于成本策略视角

将成本策略引入到需求价格弹性与利润的对应关系模型中,找到了企业在以保利润为目标时,临界需求价格弹性计算方法,开创性地分析出在降低变动成本策略下企业如何进行价格调整以及如何确定调整幅度,给出具有操作性的推论,对企业具有实际参考价值。