Evaluating the Impact on Pharmacy Practices of a Law Requiring the Posting of Drug Prices

Posting price lists of most frequently purchased retail drugs under Section 4333 of the California Pharmaceutical Law offers consumers the opportunity to make more effective price comparisons. The same information also permits examination of the pricing structure of an entire local market, and it was just such an examination which was undertaken in the present study for 100 items on sale at 24 pharmacies in the northern region of the San Francisco Bay area. Wide price differentials were found to exist. Pharmacies charging higher prices were found to do so across their entire product line: the higher prices were not related to better service but primarily to monopolistic practices. It was also concluded that if posting has so far failed to bring about lower prices, it may be due to token compliance. The study examined computer simulation techniques for measuring the effectiveness of small, unsophisticated pharmaceutical price surveys, and the accuracy of such surveys was shown to be extremely high.     

Information Disclosure and Consumer Credit Knowledge: A Longitudinal Analysis

Early evaluations of Truth-in-Lending have observed impressive gains in consumer knowledge about interest rates. Contrary to original goals, consumers with more education, income, and debt experience have benefited far more than low-income and minority consumers. How will these results change over time as consumers gain credit experience with the aid of disclosure? Has disclosure improved consumer understanding about finance charges, and what factors beyond socio-economic status might have enhanced consumer knowledge of credit terms? These questions are addressed in this report of a large sample of California households surveyed at two points in time. The longitudinal analysis shows individual changes in knowledge, the effects of credit experience on learning, and a projection of future levels of credit knowledge.     

House Price Markups and Mortgage Defaults

The transaction price of identical housing units can vary widely due to heterogeneity in buyer and seller preferences, matching, and search costs, generating what we term “markups” above or below the average market price. We measure markups for 3.4 million purchase-money mortgages and show that they can predict mortgage defaults and credit losses conditional on default even after accounting for collateral coverage (loan-to-value ratio) and a comprehensive set of other covariates. The findings suggest that standard collateral coverage estimation may be inaccurate, with implications for both individual and portfolio-level credit risk assessment.