Explaining trends in UK household spending

In this paper we model the changing distribution of household spending in the UK over the period 1978 to 1999 and explore the interpretation of remaining time trends in spending once changes in other observed covariates have been accounted for

Crisis Communications: How Businesses Respond in the Wake of Tragedy

Crisis communication is an ever-evolving form of communication that is integral to a business’s success. When tragedy strikes, businesses must have a thorough plan of response that manages the situation and protects their brand. This paper discusses the definition of crisis communication, its history, and how modern trends like social media, have revolutionized it. This study is important because it influences a business’s public perception, and sustainability. Thorough knowledge of crisis communication is critical to a business student’s education and will prepare them for working in fast-paced communication and business environments. An analysis of this topic should yield an understanding of crisis communication and how it can be best applied in crisis situations

Demographics in demand systems

Household composition can be expected to affect the allocation of household expenditure among goods, at the very least because of economies of scale as household size increases and because different people have different needs (adults versus children, for example). Specifying demographic effects correctly in demand analysis is important both in order to estimate correct price and expenditure elasticities and for the purpose of making household welfare comparisons. A common way of including demographics is as a function that scales total expenditure, and to make this scaling function indepen- dent of the level of total expenditure. A popular method in the parametric estimation of demand systems is to estimate share equations that are quadratic in the logarithm of total expenditure, but there is also a substantial literature on the semi-parametric estimation of Engel curves. We employ some of these semi-parametric techniques to show that, for some goods, further terms are likely to be required in the Engel curve addition to quadratic terms. We use this to identify the parameters of a scaling function that varies with total expenditure. Keywords: Demand analysis, demographics, base independence, semi-parametric.Demand analysis, demographics, base independence, semi-parametric

Explaining trends in household spending

In this paper we model the changing distribution of household spending in the UK over the period 1978 to 1999 and explore the interpretation of remaining time trends in spending once changes in other observed covariates have been accounted for.

Valuing a new good

This paper presents a nonparametric method for calculating a lower bound on the virtual or reservation price of a new good. This allows the welfare effects of product market innovations to be investigated. We illustrate the technique using consumer panel data.New goods, revealed preferences

A retail price index including the shadow price of owner occupied housing

How do house price changes affect the cost of living? The retail price index in the UK does not directly incorporate house price changes. In- stead it uses mortgage interest to capture the cost of owning a home. This is a useful method from many perspectives. However, from a con- sumer welfare perspective, while mortgage interest does capture the cost of a particular service, it does not capture the cost of housing services. The shadow price of housing captures the welfare cost to a household of changes in housing prices. In this paper we create a new shadow price index using RPI data and the shadow price of housing and investigate how replacing the mortgage interest with the shadow price of housing affects measures of the cost of living

Dynamic housing expenditures and household welfare

In this paper we develop a measure of current "expenditures" on housing services for owner-occupiers. Having such a measure is important for measuring the relative welfare of households, especially when comparing renters and owners and for measuring inflation. From a theoretical perspective expenditures equal the "shadow price" of housing services (the marginal rate of substitution between housing services and non-durable consumption) multiplied by the quantity of housing services consumed. In an idealised world, two simple measures of the shadow price are available; the user cost of housing capital and the rental price of an equivalent rental house. However, imperfect capital markets, risk aversion, the tax system, moving costs and systematic differences between houses available in the rental and owner-occupied sectors drive a wedge between the shadow price of housing and these other two measures. This paper contributes to previous research by calibrating a lifecycle model of housing investment and consumption to data from the UK Family Expenditure Survey and by developing measures of the shadow price of housing that take into account uncertainty in house prices, interest rates and incomes, dynamic life cycle choices, and liquidity constraints that depend on both income and house value

Valuing quality

This paper uses revealed preference restrictions and nonparametric statistical methods to bound a quality-constant price series for a good that changes quality over time. Unlike the more usual hedonic regression techniques for estimating quality-adjusted prices, this method does not require us to observe the changing characteristics of the good or to assume a particular functional relationship between these characteristics and quality. To place a bound on quality change using revealed preference conditions we assume that preferences are stable over time, that quality change occurs in one good or group of goods and that the direction of quality change is known

A non-parametric bound on substitution bias in the UK retail prices index

This paper uses revealed preference restrictions and nonparametric statistical methods to bound true cost-of-living indices. These are compared to the popular price indices including the type used to calculated the UK RPI. This is used to assess the method of calculating the RPI for substitution bias

A nonparametric method for valuing new goods

This paper presents a revealed preference method for calculating a lower bound on the virtual or reservation price of a new good and suggests a way to improve these bounds by using budget expansion paths. This allows the calculation of cost-of-living and price indices when the number of goods available changes between periods. We apply this technique to the UK National Lottery and illustrate the effects of its inclusion in measures of inflation. JEL Classification: C43, D11