Effects of Changes in Household Size,Consumer Taste & Preferences on Demand Pattern in India

Current research in applied demand analysis has been addressing the twin issues of degree of non-linearity or curvature of the Engel curves and the ability to capture price effects appropriately by the demand system. Further, in addition to income and prices, the role of demographic variables like household size, composition and dynamic aspects like consumer taste & preferences are also being ’ emphasized in recent literature. Continuous efforts are being made to modify the existing models and propose new ones to incorporate the above developments. The purpose of this study is to re-examine the usefulness of the popular linear expenditure system vis-à-vis the two other flexible models viz. Nasse expenditure system, a generalization of the linear expenditure system itself, and the almost ideal demand system in the above context for India.The empirical results indicate wide variation in marginal budget shares and demand elasticities across income groups, rural-urban sectors and alternative models. The household size and consumer taste & preferences are found to be statistically significant. The results confirm the earlier findings that there are significant changes in consumer tastes away from cereals and pulses in favor of other food and nonfood commodities. The results also show that flexible models, which are theoretically superior, gave unacceptable positive price responses for some commodities and violated second order conditions of utility maximization. It is found that some ad-hoc separability restrictions are needed, thereby limiting the flexibility of the model, to get negative own-price responses in these models. But, second order conditions are still violated. The tests of nested hypotheses also confirm the need for inclusion of household size, consumer taste, income group and rural-urban dummies along with their interaction variables in the demand system.

     

Externalities and fundamental nonconvexities: A reconciliation of approaches to general equilibrium externality modeling and implications for decentralization

Starrett (1972) [33] and Boyd and Conley (1997) [7] approaches to externality modeling are unified by distinguishing between producible and nonproducible public commodities. Nonconvexities are associated with detrimental producible public commodities but not with nonproducible public commodities in Boyd and Conley (1997) [7]. Disposability properties (costly or costless) imply that producible public commodities are either by-products (e.g., pollution) or joint-products (e.g., national defense). Markets fail for both beneficial and detrimental by-products. Nonconvexities imply that price-based equilibria, e.g., Pigovian tax equilibrium, may not be Pareto-efficient. Foley's (1967, 1970) [17] and [18] “public competitive equilibrium” combines price and quantity signals with a unanimity criterion and restores the equivalence between equilibrium and efficiency.     

Counting the cost of vulture decline—An appraisal of the human health and other benefits of vultures in India

Widespread use of the non-steroidal anti-inflammatory drug (NSAID) diclofenac to treat livestock has resulted in dramatic declines in the populations of vultures across India. This has become an issue of considerable concern as vultures are a keystone species and their decline has a range of socio-economic, as well as cultural and biodiversity impacts. In this paper, we review these impacts and estimate in detail the economic cost of one of them: the human health impacts of the vulture decline. Livestock carcasses provide the main food supply for vultures, and are also eaten by dogs. Dogs are the main source of rabies in humans in India, and their populations have increased substantially in parallel with the vulture decline. The potential human health impact of rabies associated with the vulture decline is found to be significant. This, and a wide range of other impacts suggest that significant resources should be put into (1) testing of pharmaceutical products to ensure that similar situations are not repeated, (2) helping vulture populations to recover through the use of alternative drugs to diclofenac that are of low toxicity to vultures, and (3) through conservation breeding programmes.     

A commentary on “Performance measurement and joint production of intended and unintended outputs” by Finn Førsund

Journal of Productivity Analysis -     

Fiscal federalism approach for controlling global environmental pollution

This paper finds that optimal international carbon taxes are country specific and we can decompose a tax on a domestically produced carbon-intensive commodity into a revenue tax, a tax to control local atmospheric pollution and an international carbon tax. It shows that an institutional arrangement for the world economy similar to the fiscal federalism in the federal countries can be useful to internalize the global externalities of atmospheric pollution.     

The real-world economic impact of home-based video electroencephalography: the payer perspective

Abstract

Aims: Electroencephalography (EEG) is an established method to evaluate and manage epilepsy; video EEG (VEEG) has significantly improved its diagnostic value. This study compared healthcare costs and diagnostic-related outcomes associated with outpatient vs inpatient VEEG among patients with epilepsy in the US.

Materials and methods: This study used Truven MarketScan Commercial and Medicare Supplemental claims databases. Patients with a VEEG between July 1, 2013 and December 31, 2016 were identified. Index event was the first VEEG claim, which was used to determine inpatient and outpatient cohorts. Continuous health plan enrollment 6?months pre- and 12?months post-index VEEG was required. Primary outcomes were costs during the index event and 12?months post index. A generalized linear model with gamma distribution and a log link was used to estimate adjusted index and post-index costs.

Results: Controlling for baseline differences, epilepsy-related cost of index VEEG was significantly lower for the outpatient ($4,098) vs the inpatient cohort ($13,821; p?<?0.0001). The cost differences observed at index were maintained in the post-index period. The 12-month post-index epilepsy-related costs were lower in the outpatient cohort ($6,114 vs $12,733, p?<?0.0001). Time from physician referral to index VEEG was significantly shorter in the outpatient cohort (30.6 vs 42.5?days). Patients in the inpatient cohort were also more likely to undergo an additional subsequent follow-up inpatient VEEG (p?<?0.0001).

Limitations: Administrative claims data have limitations, including lack of data on clinical presentation, disease severity, and comprehensive health plan information. Generalizability may be limited to a US insured population of patients who met study criteria.

Conclusions: Index VEEG was less costly in an outpatient vs inpatient cohort, and costs were lower during the follow-up period of 12?months, suggesting that outpatient VEEG can be provided to appropriate patients as a less costly option. There were fewer follow-up tests in the outpatient cohort with similar pre- and post-index diagnoses.     

Government Production Technologies in Canada: 1961 to 2000

This study explores the long-term trends of government production technologies in Canada for the past four decades, i.e. from 1961 to 2000, using the annual Canadian input-output data. According to the industry technology concept of input-output analysis, each industry chooses its human and material resource requirements and uses them as inputs in its production processes. The shares of inputs to the total spending depict the technologies employed by the corresponding industries. As such, the long-term shifts in the input shares reveal the trends of industry production technologies for a given period. This study draws on this concept to explore the long-term trends of government production technologies. It also discusses the underlying reasons for the observed trends. Among other things, the study shows that the government production technologies in Canada were influenced not only by the changing functional patterns, but also by the changing input patterns of government expenditure. In addition, the combined shares of employee compensation and capital consumption, both own-account resources, steadily declined. On the other hand, the combined shares of purchased services and other inputs, which are resources acquired from outside sources, gradually rose during the past four decades.     

Management of common property resources: Limits to voluntary collective action

This paper finds that the voluntary collective action may be an alternative to market and government in the management of common property resources. In developing countries, the people's capabilities to harness the preserved commons and the fairness in the appropriation of benefits from them are the limits on the voluntary collective action. It shows that collective action is possible if an outside agency plays the role of a catalyst in mitigating these limits. It also shows that there can be mutually beneficial sharing arrangements between government and village communities for the management of local forest resources. The standard result that common and state property resources turn into open access resources as population grows also holds good for the natural resources jointly managed by government and people.