Showing papers on "Consumption (economics) published in 1976"

Price theory and applications

Abstract: The nature and scope of economics working tools utility and preference consumption and demand applications and extensions of demand theory the business firm equilibrium in the product market-competitive industry monopoly product variety and quality oligopoly and strategic behaviour demand for factors of production resource supply and factor-market equilibrium exchange transaction costs and money the economics of time welfare econo-mics - the theory of economic policy political economy

Economic Demand Theory and Psychological Studies of Choice1

Abstract: Publisher Summary This chapter introduces a framework borrowed from economics within which choices between different commodities may be studied in a consistent manner. This framework is “demand theory” and the particular concept within demand theory that most directly applies to studies of choice is that of “substitutability.” The relationship between psychology and economic demand theory is explored. The chapter explores that demand theory is not so much a psychological theory as it is a definition of psychological utility. It specifies an internal mechanism or can be proven true or false. Using economic concepts of budget lines, indifference curves, and substitutability, two series of experiments are conducted involving rats' choices between two different commodities. Consumption of the commodities changed as changes are introduced into the budget set-the rats consumed more of the lower priced commodity and less of the higher priced commodity. Through computer simulation, the maximization of overall rate of reinforcement results in matching of relative rate of responding to relative rate of reinforcement.

The strong case for the generalized logarithmic utility model as the premier model of financial markets

Abstract: This paper begins by comparing the available well-developed micro-economic models in finance which recognize uncertainty. It is argued that models whose distinctive simplifying assumption restricts utility functions are superior to those which instead restrict probability distributions, both with respect to the realism of their assumptions and richness of their conclusions. In particular, the most successful model, based on generalized logarithmic utility (GLUM), is a multiperiod consumption/ portfolio and equilibrium model in discrete-time which (1) requires decreasing absolute risk aversion; (2) tolerates increasing, constant, or decreasing proportional risk aversion; (3) assumes no exogenous specification of the contemporaneous or intertemporal stochastic process of security prices; (4) tolerates heterogeneity with respect to wealth, lifetime, time- and risk-preference and beliefs; (5) results in a complete specification of consumption/portfolio decision and sharing rules which include nontrivial multiperiod separation properties and explains demand for default-free bonds of various maturities and options; (6) leads to a solution to the aggregation problem; (7) results in a complete specification of the contemporaneous and intertemporal process of security prices which reveals necessary and sufficient conditions for an unbiased term structure and the market portfolio to follow a random walk as a natural outcome of equilibrium; (8) provides an empirically testable aggregate consumption function relating per capita consumption to per capita wealth and the present value of a perpetual default-free annuity which does not require inferences of ex ante beliefs from ex post data; (9) provides a nontrivial multiperiod extension of popular single-period security valuation models which is empirically testable; (10) yields a simple multiperiod valuation formula for an uncertain income stream even when this income is serially correlated over time.

Extraction Costs in the Theory of Exhaustible Resources

Abstract: This paper has two objectives. First, it reformulates the theory of optimal use of an exhaustible resource with more attention to the costs of extraction than has been customary in the literature. The output and shadow-price implications of optimal extraction are studied under these broader assumptions. Second, the paper provides some numerical solutions of a simple two-grade case, to give some feeling for the quantitative importance of changes in the supply of exhaustible resources. Our most striking result is, in fact, the suggestion that relatively large changes in resource availability generate very small changes in the sustainable level of final consumption.

Malnutrition and poverty : magnitude and policy options

Abstract: The global dimensions of malnutrition are described, and the economic impact of intervention by governments is evaluated. Based on average calorie consumption data from the mid-1960s, it is estimated that 56 percent of the population in the LDCs had calorie deficient diets while another 19 percent had deficits of less than 250 calories per day. With per capita income in all income groups growing at approximately the current rate for overall per capita income growth, and per capita food supply growing just enough to meet the demand generated by the income growth, the total calorie deficit would remain unchanged by 1990. The marginal propensity of spending of on infants' diets from additional family income is extremely low. Alternative policies aimed at improving the nutritional status of the urban target population may be classified as country wide or target group oriented policies. One countrywide policy, a general price subsidy, is considered in terms of cost effectiveness. The target group oriented programs that are examined include a food price subsidy, a food stamp program, and a straight income transfer. Only policies deliberately designed to reallocate food or income can eliminate undernutrition. Statistical tables are appended.

Impact of Socioeconomic Factors on Consumption of Selected Food Nutrients in the United States

Abstract: The impacts of socioeconomic characteristics of the household and its constituents on consumption of protein, carbohydrate, fat, vitamin A, calcium, iron, thiamine, and vitamin C were estimated. Data from 6,950 households located in the contiguous states were utilized to specify consumption relationships. Socioeconomic factors considered were: income, degree of urbanization, race, educational attainment of the homemaker, stage of the household in the family life cycle, family size, meal adjustment, and employment status of the homemaker. Income had a positive impact on the consumption of all nutrients except carbohydrate. However, nutrient consumption responsiveness to income was relatively small.

Production Organizations in the Arts

Abstract: DiMaggio and Hirsch describe the cycle from creation to consumption through which art is produced Using an organizational model which could be applied to most culture-producing milieux, they focus on three levels of analysis: interpersonal, interorganizational, and total system

The Determinants of Entry by Domestic and Foreign Enterprises in Canadian Manufacturing Industries: Some Comments and Empirical Results

Abstract: ture and Monetary Policy," April 1975, forthcoming in the American Economic Review. Motley, B., "Household Demand for Assets: A Model of Short-Run Adjustments," this REviEw 52 (Aug. 1970), 236-241. Watts, H., and J. Tobin, "Consumer Expenditure and the Capital Account," in I. Friend and R. Jones (eds.), Proceedings of the Conference on Consumption and Savings, vol. II, Philadelphia, 1960, 1-48. Zellner, A., "Basic Elements of a General Model of Consumer Behavior," in I. Friend and R. Jones (eds.), Proceedings of the Conference on Consumption and Savings, vol. II, Philadelphia, 1960, 488498.

Elasticities of demand for food: an analysis using non- additive utility functions allowing for habit formation*

Abstract: The purpose of this paper is to assess the roles of habit formation and of responsiveness to price and expenditure changes in explaining U.S. consumption of four major types of food: meats, produce, cereal and bakery products, and miscellaneous foods. Substitution possibilities among these food types are considered. Estimates of expenditure and own-price elasticities of demand are also obtained.

Theory and Measurement of Economic Externalities

Abstract: Theory and Measurement of Economic Externalities provides information on some analytical and empirical developments in the field of externalities. This book presents the function of turning out producer's goods in the form of better knowledge, analytical formulation, and approaches for application to current problems. Organized into five parts encompassing 12 chapters, this book begins with an overview of the notion of externalities in connection with analyses of economic welfare. This text then discusses the relationship between publicness and external diseconomies when either consumption or production or decision sets are nonconvex due to a high degree of externalities. Other chapters consider disproving the pessimistic conclusions concerning tax–subsidy schemes. This book discusses as well the solutions for the allocation of resources in an economy with public goods and interdependent preferences. The final chapter deals with a general framework for estimating externality production functions. This book is a valuable resource for economists.

Political Finance and Participation in Congressional Elections

Abstract: Citizens participate in the electoral process both to enjoy intrinsic benefits and in the hope of future bene fits. Factors affecting the strength of these consumption and investment motives therefore will affect registration and turnout rates, levels of campaign contributions, and electoral margins. To some extent, the strength of these motives is fixed by relatively static factors: levels of district per capita income, the degree of income inequality, the partisan division of registered voters. However, both motives also are affected by factors more apt to vary: for example, statutory arrangements, the activities of political parties, levels and types of campaign expenditures. In particular, statutory arrangements and the activities of parties which reduce costs can increase participation. Moreover, substan tial efforts to alter the partisan division of registered voters can increase campaign contributions. Also, campaign expenditures channel motivations in partisan directions, stim ulate partisan turno...

Effect ofMaternal Ethanol Consumption onFoetal andNeonatal Rat Hepatic Protein Synthesis

Abstract: Effects of maternal ethanol consumption were investigated on the rates of protein synthehsis by livers of foetal and neonatal rats both in vivo and in vitro, and on the activities of enzymes involved in protein synthesis and degradation. The rates of general protein synthesis by ribosomes in vitro studied by measuring the incorporation of [14C]leucine into ribosomal protein showed that maternal ethanol consumption resulted in an inhibition of the rates of protein synthesis by both foetal and neonatal livers from the ethanol-fed group. The rates of incorporation of intravenously injected [14C]leucine into hepatic proteins were also significantly lower in the foetal, neonatal and adult livers from the ethanol-fed group. Incubation of adult-rat liver slices with ethanol resulted in an inhibition of the incorporation of [14C]leucine into hepatic proteins; however, this effect was not observed in the foetal liver slices. This effect of externally added ethanol was at least partially prevented by the addition of pyrazole to the adult liver slices. Pyrazole addition to foetal liver slices was without significant effect on the rates of protein synthesis. Cross-mixing experiments showed that the capacity of both hepatic ribosomes and pH5 enzyme fractions to synthesize proteins was decreased in the foetal liver from the ethanol-fed group. Maternal ethanol consumption resulted in a decrease in hepatic total RNA content, RNA/DNA ratio and ribosomal protein content in the foetal liver. Foetal hepatic DNA content was not significantly affected. Ethanol consumption resulted in a significant decrease in proteolytic activity and the activity of tryptophan oxygenase in the foetal, neonatal and adult livers. It is possible that the mechanisms of inhibition of protein synthesis observed here in the foetal liver after maternal ethanol consumption may be responsible for at least some of the changes observed in 'foetal alcohol syndrome'.

The demand for dental care: a study of consumption and household production.

Abstract: Within the context of a Becker-type consumer's choice model, this paper reports an empirical study of the demand for dental care for approximately 1,000 households. The unique feature of the study is that waiting time and travel time as well as price and other traditional economic variables are entered into the regression analysis. Generally, the results confirm our expectations derived from theory, but elasticities with respect to all of the above-mentioned determinants of demand were small. In addition, some of the subtle predictions of the theory could not be confirmed.

‘Exit, Voice, and Loyalty’ Revisited: The Strategic Production and Consumption of Public and Private Goods

Abstract: In his recent review of Albert O. Hirschman's book Exit, Voice, and Loyalty Brian Barry suggested that the next step was ‘to look more systematically at ways in which exit and voice can be related, and to try and bring all the variables relevant to each kind of relationship into an explicit theoretical structure.’ This paper is an attempt to move in this direction by locating the concepts involved unequivocally within the so-called ‘economic’ or ‘rational choice’ paradigm. It is hoped that any resulting loss of richness will be more than compensated for by an increase in the internal consistency of the argument. It will be demonstrated that most of the logic of Exit, Voice, and Loyalty rests on ‘economic’ assumptions – Barry has already shown that where Hirschman departs from these his argument is at its weakest – and that making this reliance fully explicit not only increases the rigor of the approach but reorients some of the conclusions.

Benefit Shares and Majority Voting

Abstract: In the burgeoning literature on collective decision making, attention generally has been focused on the public provision of goods in equal quantities to all recipients As a result, there has been little positive analysis of the effects of differential distribution of the benefits of public activities This state of affairs contrasts with the more developed literature on the effects of differential distribution of the costs of public activities By analogy to the tax share concept in the study of cost sharing, this paper examines the effects of differential benefit shares, or of changing benefit shares, on voting behavior at the individual and aggregate level in a majority voting model Just as the early literature on cost sharing often assumed equal sharing by all and thus the same tax share for all, the assumption of equal quantities for all can be interpreted as equal benefit shares This equal quantities assumption requires a distinction between production units (the units relevant for production and cost functions) and consumption units (the units relevant for individual preference relations)' This distinction immediately raises the issue of the distribution of public benefits, ie, the transformation of production units into consuimption units A benefit share measures the rate at which a production unit is transformed into an individual's consumption units2 For example, in the case of a "pure public good," without exclusion, the benefit shares would all equal unity The problem this paper is concerned with can now be stated in its simplest form by the following example Suppose that the state has made private trading in bread illegal In lieu of market exchange, the government distributes the bread at a zero price, with the cost of the bread met through taxation The total amount of the bread provided (units in production) is set by a majority vote, while the distribution of bread (units in consumption) is based on a fixed share arrangement For example, if the total distribution is 100 loaves per week and Joe's benefit share is 02, then he receives 2 loaves per week If the distribution scheme is changed-the fixed benefit shares are changed-how does this affect the total amount of bread (in production units) that voters will most prefer? On what factors does each voter's demand depend and how do these individual demands aggregate into market level results? Section IA examines the individual choice problem: how does an individual's most preferred public sector size change as his benefit share changes? Buchanan (1968, p 54) conjectures that an individual with * Assistant professors, department of economics, and research associates, Center for Study of Public Choice, Virginia Polytechnic Institute and State University We are indebted to the Ford Foundation for financial support of this research We acknowledge the helpful comments of James Buchanan, Robert Parks and Theodore Bergstrom on earlier drafts of the paper We are also deeply indebted to our late colleague Winston Bush who helped us launch our joint research Earlier drafts of this paper were presented at the Southern Economic Association Meetings in Atlanta 1974, and in seminars at the University of Arizona and the University of Illinois I This distinction is made in Buchanan (1966), further developed in Buchanan (1968, pp 52-56), and is a major issue in the discussion between Albert Breton and Buchanan (1967) 2 Recent empirical work has explicitly utilized this distinction by assuming equal sharing in the consumption units For examples of the use of the equal sharing assumption in the recent empirical literature, see Thomas Borcherding and Robert Deacon, Theodore Bergstrom and Robert Goodman, or Robert Spann

The Other Side of the Paycheck: Monopoly Capital and the Structure of Consumption

Abstract: The housewife is central to understanding women's position in capitalist societies. Marxists expected that the expropriation of production from the household would radically diminish its social importance. In the face of the household's continuing importance, Marxists have tried to understand it by applying concepts developed in the study of production." Yet obviously, the household is not like a factory, nor are housewives organized in the same way as wage laborers. As Eli Zaretsky has written, the housewife and the proletarian are the characteristic adults of advanced capitalist societies." Moreover, households and corporations are its characteristic economic organizations. Just as the socialization of production has not abolished the housewife, so accumulation has not abolished the economic functions of the household. Harry Braverman has demonstrated how the accumulation process creates new occupational structures, and he has documented the expansion of capital's activity to new sectors. We will argue that these developments also change the social relations of consumption, an economic function which continues to be structured through the household and performed by women as housewives. Click here to purchase a PDF version of this article at the Monthly Review website.

Effects of an exchange rate change on agricultural trade

Abstract: A theoretical model is reviewed and used to evaluate the effects of currency devaluation or revaluation on production, consumption, trade, and price in both exporting and importing countries. The model is applied to the effects of devaluation on the agricultural sector, when supply and demand are inelastic. Based on the analysis, devaluation will have only a small impact on agricultural trade. What effect there is will be primarily on price rather than quantity.