Consumer sorting and hedonic valuation of wine attributes: exploiting data from a field experiment

This article uses a novel experimental approach to measure consumer willingness to pay (WTP) for wine attributes. We invited customers of a local supermarket who had selected a bottle of wine to purchase to participate in a valuation experiment. Integrating their original wine choice into the experiment, each participant evaluated six alternative wines, generating a rich set of data on willingness to pay and consumer characteristics. The data from the experiment allow us to compare standard shelf price‐based wine attribute valuation estimates with estimates using WTP data and an increasing amount of information about individual consumers. The full model employs individual fixed effects to estimate WTP parameters without bias from consumer sorting or supply side influences. Our WTP estimates for wine attributes differ markedly from previous attribute value estimates. Consumers in our sample display clear and stable preferences for wine varieties, but less clear preferences for appellations. Our results suggest caution is needed in using market prices to estimate parameters of the consumer valuation function for product attributes.     

An ‘Algorithmic Links with Probabilities’ Concordance for Trademarks with an Application Towards Bilateral IP Flows

Trademarks (TMs) shape the competitive landscape of markets for goods and services in all countries. As a key element of branding, they can inform consumers about the quality and content of goods and services. Yet, researchers are largely unable to conduct rigorous empirical analysis of TMs in the global economy because TM data and economic data are organised differently and cannot be analysed jointly at the industry or sector level. We propose an ‘algorithmic links with probabilities’ (ALP) approach to match TM data to economic data and enable joint analysis with these data. Specifically, we construct a NICE class‐level concordance that maps TM data into trade and industry categories forward and backward. This concordance allows researchers to analyse differences in TM usage across both economic and TM sectors. We apply this ALP concordance for TMs to characterise patterns in TM registrations across countries and industries and to investigate some key determinants of international technology flows by comparing bilateral TM registrations and bilateral patent grants. We find that international patenting and TM flows are jointly determined by trade‐related influences with significant differences in intellectual property usage across industry sectors and income levels.     

Consumption versus asset smoothing: testing the implications of poverty trap theory in Burkina Faso

Despite solid theoretical foundations for the notion that poor, borrowing-constrained households will intertemporally manage assets to smooth consumption, the consumption-smoothing hypothesis has not always withstood empirical scrutiny. This paper reassesses the intertemporal asset management problem with a poverty trap model and shows that we would expect to see asset smoothing, not consumption smoothing, in the neighborhood of critical asset levels at which optimal accumulation behavior bifurcates. We then employ threshold estimation techniques to empirically confirm the co-existence of consumption and asset smoothing regimes using a household panel data set from West Africa. Households above the estimated threshold almost completely insulate their consumption from weather shocks, whereas those below the threshold do not. These results not only indirectly provide evidence of the existence of poverty traps but also speak to the level and incidence of the costs of uninsured risk.     

Agricultural technologies for climate change in developing countries: Policy options for innovation and technology diffusion

Climate has obvious direct effects on agricultural production. The reverse is more apparent than ever as greenhouse gas emissions from agriculture are tallied. The development and effective diffusion of new agricultural practices and technologies will largely shape how and how well farmers mitigate and adapt to climate change. This adaptation and mitigation potential is nowhere more pronounced than in developing countries where agricultural productivity remains low; poverty, vulnerability and food insecurity remain high; and the direct effects of climate change are expected to be especially harsh. Creating the necessary agricultural technologies and harnessing them to enable developing countries to adapt their agricultural systems to changing climate will require innovations in policy and institutions as well. Potential constraints to innovation involve both the private and public sectors in both developing and developed countries. The process of transferring agricultural innovations across agroecological and climatic zones is often subject to agronomic constraints. Often, the most binding constraints occur at the adoption stage, with several factors that potentially impede poor farmers’ access to and use of new technologies. Based on discussions of these constraints, we derive six policy principles and use these principles to suggest several specific investments and policy priorities.     

Indian farmers’ valuation of yield distributions: Will poor farmers value ‘pro-poor’ seeds?

Potential poverty traps among the rural poor suggest a need to reduce poor farmers’ vulnerability by stabilizing crop yields and limiting yield losses. Advances in biotechnology will help address this need directly with crops that tolerate climate fluctuation or resist biotic stresses. Evaluating ex ante how farmers will value these ‘pro-poor’ seeds is important for delivery design, but also challenging. This paper describes an experimental economic approach to understanding farmers’ valuation of such seeds. Using data from a survey and experiment, I assess Indian farmers’ valuation of changes in the mean, variance, and skewness of payoff distributions. These farmers value increases in expected value, but seem indifferent about higher moment changes in payoff distributions. Farmer traits such as wealth and risk exposure affect their valuation of these changes only mildly. While various limitations to the experimental approach must qualify practical implications of these findings, the experiment demonstrates the viability of conducting valuation experiments with open-ended questions in developing countries.     

Risk Averters that Love Risk? Marginal Risk Aversion in Comparison to a Reference Gamble

We propose an analytical distinction between standard risk aversion based on the valuation of a single gamble and marginal risk aversion based on the change in valuation between two gambles. We measure marginal risk aversion in two dimensions—mean and variance. Data from a field experiment is used to study marginal risk aversion. Our results suggest that individuals rely on a reference gamble when assessing marginal risk. Individual responses to marginal changes in mean and variance are nearly identical in direction and magnitude—suggesting that information on both standard and marginal risk aversion is needed to accurately model behavior.     

Is Risk Aversion Really Correlated with Wealth? How Estimated Probabilities Introduce Spurious Correlation

Economists frequently focus on correlations between wealth and risk preferences but rarely observe the probabilities needed to test this relationship empirically. These unobserved probabilities are typically estimated via profit or production functions conditioned on wealth correlates, which may leave statistical fingerprints on subsequently-estimated risk aversion coefficients and confound correlations between wealth and risk preferences. Using data from an experiment with observable probabilities, we compare risk aversion coefficients based on true probabilities with those based on probabilities estimated using standard approaches and show how estimated probabilities can change risk aversion coefficients substantially and introduce spurious correlation between risk aversion and wealth.     

Patent disclosure requirements and benefit sharing: A counterfactual case of Morocco's argan oil

This article uses the seemingly promising case of Morocco's argan oil to assess the value of patent disclosure requirements (PDRs) as a policy instrument aimed at improving the sharing of biodiversity benefits. After introducing the disclosure requirements debate and discussing relevant features of the argan oil case, I construct a simple counterfactual by asking: “How would PDRs have changed benefit sharing in the argan oil case?” From this case, three practical considerations emerge that shed a realistic, if cautious, light on the marginal value of PDRs as a benefit sharing mechanism: (1) PDRs require an accompanying national biodiversity regime but their relative value is inversely proportional to regime strength (2) PDRs should be assessed based on the additional compliance incentives they provide and median, not blockbuster, patent values and (3) the alternative to no PDRs and no regime is not zero benefits. While these considerations are inherently country-specific, PDRs should generally be assessed at the margin rather than in vague conceptual and aggregate ways.     

Using an economic experiment to estimate willingness‐to‐pay for a new maternal nutrient supplement in Ghana

Scaling up access to supplements designed to prevent undernutrition, such as new small‐quantity lipid‐based nutrient supplements (SQ‐LNS), may require distribution via both public channels and retail markets. The viability of SQ‐LNS retail markets will hinge on household‐level demand. We use an economic experiment to characterize initial willingness‐to‐pay (WTP) for a maternal SQ‐LNS product in Ghana. WTP is positive for most participants, though below the estimated cost of production for many. WTP varies depending on income, assets, and parity status. These findings have implications for the design of public health policy and hybrid public–private delivery mechanisms.     

Tracking the technological composition of industries with algorithmic patent concordances

ABSTRACT

Patents are a useful proxy for innovation, technological change, and diffusion. However, fully exploiting patent data for economic analyses requires linking patents to measures of economic activity, which has proven to be difficult. We construct probabilistic linkages between the U.S. Patent Classification (USPC) system and Cooperative Patent Classification (CPC) system and industry and product classifications including the North American Industrial Classification System (NAICS), International Standard Industrial Classification (ISIC), Harmonized System (HS) and Standard International Trade Classification (SITC). We use these concordances to evaluate the persistence of technology-industry relationships over time by generating linkages over different years of patent data. We find strong persistence in technology usage within industries and, until recently, relatively little change in the technology composition of industries over time. As the technology composition of industries becomes more stable, we find evidence of increased specialization. Finally, we show that industries that exhibit changing technology composition also show shifting occupational composition.