We investigate the impact of health on wealth depletion of African American, Hispanic, and non-Hispanic white elders. Using the data from 4,464 elderly households that participated in both the 1993 Asset and Health Dynamics of the Oldest Old and the 1998 Health and Retirement Study, we find that health problems contribute to wealth depletion differently across elders in different racial and ethnic groups. We draw policy implications from the findings regarding ways to help consumers protect their financial security from health shocks in later life.
Alcohol messages contained in television programming serve as sources of information about drinking. To better understand the ways embedded messages about alcohol are communicated, it is crucial to objectively monitor and analyze television alcohol depictions. This article presents a content analysis of an eight-week sample of eighteen prime-time programs. Alcohol messages were coded based on modalities of presentation, level of plot connection, and valence. The analysis reveals that mixed messages about alcohol often coexist but the ways in which they are presented differ: whereas negative messages are tied to the plot and communicated verbally, positive messages are associated with subtle visual portrayals.
This paper proposes the presence of a sacred/profane continuum along which marketing exchanges may be made. The functioning of this continuum is illustrated through the examination of novel reproductive markets, e.g. surrogate mothers, in vitro fertilization, that “mix” aspects of sacred and profane exchange, resulting in anxiety and confusion for market participants and society as a whole. Some ethical guidelines for governing such mixed markets are suggested.
Using newly collected data from the RAND American Life Panel, we examine potential explanations for the gender gap in financial literacy, including the role of marriage and who within a couple makes the financial decisions. Blinder-Oaxaca decomposition reveals the majority of the gender gap in financial literacy is not explained by differences in the characteristics of men and women-but rather differences in coefficients, or how literacy is produced. We find that financial decision making of couples is not centralized in one spouse although it is sensitive to the relative education level of spouses.
An "authorized user" is a person who is permitted by a revolving account holder to use an account without being legally liable for any charges incurred. The Federal Reserve's Regulation B, which implements the 1974 Equal Credit Opportunity Act, requires that information on spousal authorized user accounts be reported to the credit bureaus and considered when lenders evaluate credit history. Since creditors generally furnish to the credit bureaus information on all authorized user accounts, without indicating which are spouses and which are not, credit scoring modelers cannot distinguish spousal from non-spousal authorized user accounts. This effectively requires that all authorized user accounts receive similar treatment. Consequently, becoming an authorized user on an old account with a good payment history, may improve an individual's credit score, potentially increasing access to credit or reducing borrowing costs. As a result, the practice of "piggybacking credit" has developed. In a piggybacking arrangement, an individual pays a fee to be added as an authorized user on an account to "rent" the account's credit history. This paper provides the first comprehensive look at authorized user accounts in individual credit records and how their importance differs across demographic groups. Our analysis suggests that piggybacking credit can materially improve credit scores, particularly for individuals with thin or short credit histories. We also evaluate the effect that eliminating authorized user accounts from credit scoring models would have on individual credit scores. Our results suggest that removing this information has relatively little effect on credit scores, but may reduce model predictiveness.
This paper examines the determinants of household alcohol expenditures by using a nonnormal and heteroscedastic double-hurdle model to accommodate zero observations in the sample. The model is a generalization of the double-hurdle model estimated in previous studies of alcohol consumption. We also examine the effects of explanatory variables by calculating and decomposing the elasticities. Findings support the use of a more generalized error distribution. Income, region, education, and household demographics are among the significant determinants of alcohol expenditures.
Food away from home, especially fast food, is often cited as contributing to rising obesity. This negative publicity can affect the demand for restaurant meals. In this study econometric models explaining visits to table service and fast food restaurants are estimated. The explanatory variables include not only standard demographic and economic measures but also measures of nutrition knowledge, attitudes, and concerns. Effects for the former are similar to those found in past studies. For nutrition factors, we find only limited impact for table service, but there is strong evidence that nutrition-orientated consumers tend to have lower fast food consumption.
We model side payments in a competitive credit-card market. If competitive retailers charge a single (higher) price to cover the cost of accepting cards, banks must subsidize convenience users to prevent them from defecting to merchants who do not accept cards. The side payments will be financed by card users who roll over balances at interest if their subjective discount rates are high enough. Despite the feasibility of cross subsidies among cardholders, price discrimination without side payments is Pareto preferred because of the costliness of the card network--unless banks have other motives, such as purchasing options on future borrowing by convenience users.
How does the observed pattern of household purchases vary, as we extend or shorten the period of observation? An empirical analysis of data from the U.S. Consumer Expenditure Survey, Interview Survey, from 1987–1989, reveals that there is considerable heterogeneity across disaggregate goods and across households in the frequency of expenditure. Issues of data quality and of the implications of the period of observation for Tobit analysis are also discussed.
In this study a utility maximizing model is developed which accommodates changing states of information. Rational consumer choices in one state of information can lead to realizing different levels of utility than anticipated. Differences between these levels of utility suggest a measure for the value of information. This framework is applied to estimating the potential cost of possible inaccuracies in the EPA fuel-economy ratings. Survey data collected from new car buyers then are used to infer the magnitude of the actual costs that may be caused by the present EPA information.
The life cycle hypothesis of consumption assumes the household to take a life-time perspective on all resources available for consumption, and to use the assets accumulated during the life-time to fund later consumption. Typically, households in the middle, high earning years, are able to save; younger and older households borrow or dissave. For many, a large share of accumulated household assets reside in home equity. This paper analyzes the propensity to use home equity to fund current consumption using a legit analysis of homeowners. The results support earlier criticism of the life cycle hypothesis in finding that older households do not rely on dissaving from assets. Older homeowners are less likely to use home equity to fund current consumption than others. Both sociodemographic determinants of life cycle changes as well as income variables are significant determinants of willingness to use home equity. Liquidity considerations appear to be less important.
A quantity surcharge exists when the unit cost of a given brand is higher for a large-size package than for a smaller one. This paper examines some product and household characteristics that influence observed quantity surcharging practices. Results indicate that the propensity to buy a large-size package of a product is positively influenced by the extent of a household's usage of that product, procurement cost, and carrying capacity, and is negatively influenced by the propensity to price search. A retailer's decision to levy a quantity surcharge is, in turn, influenced by the demand for the product, the propensity to buy large-size packages, and to some extent the product's carrying cost.
Forthcoming in Journal of Consumer Affairs 34 (no 1): 2000 A key goal of welfare reform is for recipients to establish stable, long-term work patterns under the assumption that regular involvement in work will eventually improve their well-being. Past research provides little information about the determinants of employment over time for women who were welfare recipients, either pre- or post-PRWORA, and little information about how work affects their economic well-being and experiences of material hardship. After a review of the relevant literature, we address the following questions in this paper: To what extent does a sample of women who received cash assistance in early 1997 establish work attachment over time? How is the proportion of time worked over the 1997-1998 period associated with income and poverty at the end of this period? How is the amount of time spent working associated with experiences of material hardship and subjective well-being?
This study examines the role of reliable vehicles in facilitating employment, using a new dataset, the Iowa Transportation and Employment Survey. The empirical results document significantly higher levels of transportation problems and human capital barriers among low-income compared to other households, and among low-income nonworking adults compared to their employed counterparts. The multivariate analysis of low-income households shows that employment and reliable transportation are related. Respondents without access to a reliable vehicle are less likely to be employed; those employed are more likely to have access to a reliable vehicle. Residence in an area adjacent to a metropolitan area has a positive effect on working.
How well does an early investigation of household expenditures, conducted without benefit of powerful statistical procedures, stand up when subjected to statistical treatment? Chapin's work in New York City is examined this way and his conclusions borne out when more modern analytical techniques were applied. This suggests even greater confidence for the role which Chapin's work has played as underpinning for succeeding budget studies in the U.S.
This study was designed to determine which topics historically have been most frequently considered to be a part of consumer education and to identify changes over time in the coverage of particular topics. Fifteen selected high school consumer education texts published over a 40-year period were examined and their contents classified into 50 topic categories. Overall, it was found that there was substantial variation among the texts in the topics included and in the length of coverage given to them. While a small group of topics was covered in all of the books, only limited evidence was found for a developing consensus about many other areas. It also appears that the content of consumer education textbooks was relatively unresponsive to economic and social changes over the 40-year period.
While previous surveys of bankrupts and cross-sectional analyses of state data have provided a profile of “typical” bankrupts and the various constraints under which they operate, little in the economic and legal literature on personal financial failure explains the postwar growth in consumer bankruptcies in the United States. This paper constitutes a first attempt to model the theoretically appropriate determinants of aggregate failure rates and to test them empirically for the period 1945 to 1981. The data indicate that the incidence of financial failure has been exacerbated by rising divorce rates, unemployment and credit use, which increased through the mid-1970's. These trends were largely mitigated by increasing consumer wealth held in the form of real estate. However, there is tentative evidence that during its first two years, the Bankruptcy Reform Act of 1978 may have encouraged consumers to petition for bankruptcy.
This study attempts to determine the reliability of product quality ratings published in Consumer Reports and its British counterpart, Which?, over the last 30 years. Ratings on the same product brands and models as well as the same evaluative dimensions are compared by statistically analyzing the report findings for 43 pairs of parallel tests conducted by the two magazines. Three measures of agreement were employed in this analysis, and all three revealed statistically significant (above chance) levels of agreement between the two magazines. Implications of the study findings are discussed for consumer testing organizations as well as for consumer researchers and consumer educators.
Consumer Expenditure Survey data for 1960 and 1996 are used to examine the real consumption of single-earner and dual-earner households. Both real consumption quantities and budget shares of consumption categories were found to differ by household earner type. However, both real consumption quantities and budget shares of the majority of consumption categories were more similar for singleearner households and dual-earner households with two full-time workers in 1996 than in 1960. Also, the savings rate of all household earner types improved significantly from 1960 to 1996.
Consumer Expenditure Survey data from 1960 to 1996 are used to examine trends in real consumption, real after-tax income, market work time, and real after-tax wages for single-earner and dual-earner households. Over the entire time period, most households experienced substantial improvements in measures of their prosperity. However, economic progress was considerably reduced when the comparison was from 1972 to 1996. Also, wage changes dominated changes in market work time over all time periods.
Concern with pesticide use is a major issue for consumers. The present paper examines changes over time in consumer attitudes toward pesticide use. The study also examines the relationship between socioeconomic factors and consumer concern with pesticide use. Findings suggest that consumers were more concerned with pesticide issues in 1984 than in 1965. Concern has increased in terms of the impact of pesticides on wildlife, on farmers, and on individual health. Concern about pesticides is widespread and is not centered in any particular population group.
Systematic samples of subscribers to Consumer Reports were surveyed in 1970 and 1976 to obtain their evaluations of the information they had received. Responses are compared between the two years, stressing the environmental context of each measure. Attitudes toward characteristics of the information and satisfaction with Consumer Reports are found to be high in both years, but ratings are significantly less favorable in 1976. Implications for Consumers Union management, other policy-makers, and further research are discussed.
Despite the theoretical and practical interest in consumer boycotts, little in the way of an empirical literature has accumulated on this form of marketplace action. The present study surveyed news sources and participants in an effort to understand consumer boycotts which occurred in the United States in the 1970–1980 period. A total of 90 boycotts was identified and described. The findings indicate that boycotts have involved an unusually wide variety of protest groups, target organizations, and social concerns in cities and states in every region of the United States. They also appear to be on the increase. Some factors which may influence the success of boycotts are identified and discussed. Also discussed are ways in which consumer boycotts in the United States have changed and ways in which they have remained the same since the turn of the century. Of special interest here is the growing use of “surrogate boycotts” to deal with issues with origins outside of the marketplace.
Trends in consumer attitudes toward business philosophy, product quality, advertising, consumer responsibilities, government regulation and price controls are examined. The findings of three national surveys indicate that the level of consumer discontent did not change substantially between 1971 and 1975. Despite expanding efforts to advance the interests of consumers, the basic criticisms and frustrations expressed by respondents in 1971 were echoed again in 1973 and 1975. However there were some notable trends in the kinds and magnitudes of consumer concerns over this period. The need to treat consumer dissatisfaction as a relative concept is emphasized, and it is suggested that comparisons of present levels of consumer unrest to a zero base would probably lead to exaggerated interpretations of current conditions.
This study was designed to measure the complexity of written material in a selected group of consumer durable warranties. The Fog Index and the Flesch Count were used in determining complexity and readability of warranties. Readability levels were computed for 125 warranties in nine categories of consumer durables: washing machines, refrigerators, vacuum cleaners, color televisions, coffee-makers, can openers, stereos, bicycles, and automobiles. The results revealed that most of these warranties will be difficult to read for those with a high school education or less. As a result, the warranties examined in this study provide little protection against risk or claims for individuals who may not understand their specific terms as they are presently stated.
An analysis of research articles published in the Journal of Consumer Affairs for the issues published from 1975 (1) through 1984 (2) reveals a marked increase over time in the number of papers focusing on policy issues and a marked decrease over time on articles focusing on the consumer movement and consumer education. The largest number of authors during this period were from the University of California-Davis. Forty-four percent of all authors were from business and economics subject areas, and 26 percent were from home economics. Assistant Professors had the highest publishing rate. Papers were found to be equally divided between land grant and nonland grant institutions with the majority being of single or dual authorship. It is concluded that the Journal of Consumer Affairs is meeting its stated editorial policy.
Faculty at research universities face the challenge of doing research that both interests consumer agencies and possesses academic credibility. The Center for Consumer Research at the University of California, Davis, evolved an approach for doing this based on ecological methodology, an action research model, multi-channel dissemination, and post-research evaluation. The lessons learned during the 16-year history of this nondepartmental center should be of interest to consumer researchers.
A socially efficient bankruptcy law is one that would have the effect of minimizing the present value of social costs stemming from bankruptcy while permitting debtors to make a “fresh start.” Analysis of a sample of petitions for personal nonbusiness bankruptcy filed under the Bankruptcy Reform Act of 1978 shows that about 30 percent of petitions for Chapter 7 and about 25 percent of petitions for Chapter 13 were cases where social costs were not minimized as would be required under socially efficient bankruptcy legislation. The social costs of Chapter 7 may be reduced under proposed reform [S. 445 and H. R. 1800] as the judge would be provided with information concerning estimates of debts repayable under both chapters and would disallow those Chapter 7 cases which represented a substantial abuse of bankruptcy law. The study data suggest that guidelines for acceptance of Chapter 13 cases should also be scrutinized. In particular, petitioners should be discouraged from providing “token” debt repayment plans while maintaining ownership of large accumulations of assets.
Consumerism as a force in our society is maturing. Consumer education as a field of study is also growing up. It is beginning to be recognized as a positive and constructive force in the economy. In the decade of the 80's we can probably place less emphasis on the adversarial and protective issues and more on the rights and responsibilities of consumers in a market economy. A second or “hidden” agenda should be to encourage improvement in the production and delivery system itself.
Consumer education belongs to no single discipline. Even economics cannot provide the whole story for a consumer education program. However, consumer education that does not require solid economic understanding is indeed misnamed.
Although the primary focus of our efforts should be on the decision making of the individual and the household, our teaching must clearly articulate with the larger economy. We are living in a different economic climate than prevailed a decade or so ago. We must keep abreast of rapidly changing social institutions and market arrangements if our teaching is to be relevant and meet the challenges of the coming decade.
In recent years, rising market concentration has been cited as an indicator of deregulation-induced troubles within the U.S. commercial airline industry. In this paper, a contestable market framework is used to examine whether changes in market concentration increased airfares in 19 different destination markets at three different points in time. The empirical analyses indicate that concentration measures gained in importance in setting airfares during the 1980s suggesting that market contestability may have declined. The estimates also show that the demand for air travel, on average, became more own-price elastic over the 1980s for the 19 destination cities analyzed.
Households' changes in consumer debt from 1983–89 were examined using the panel dataset of the Survey of Consumer Finances. Logit models of the odds of an increase and a decrease in debt quintile revealed four factors hypothesized by Bryant (1990) to be symmetrically related—household size, respondents marital status, inflationary expectations, and time preferences. Asymmetrical effects of other variables, including life cycle consumption needs, present resources, expected future resources, and preferences were found for either the odds of an increase or decrease in consumer debt, but not both. Households' access to credit markets and changes in economic status between 1983 and 1989 also significantly affected the odds of change in consumer debt status, albeit not consistently across models. Household level change in consumer debt and the factors that affect it are more complex than hypothesized.
Using the panel data from the 1983–1989 Survey of Consumer Finances, this research examines the shifts in households' income and debt quintiles and changes in respondents' attitudes toward credit. Households exhibited considerable income mobility during the 1980s, almost as much as during the more volatile decade of the 1970s previously reported by Duncan (1986). Except for a committed group of “no debt” households, there was even more mobility in households' debt status, that is, a majority of households were in a different debt quintile in 1989 than in 1983. Respondents' attitudes toward debt also changed considerably with more respondents' becoming more negative toward credit than more positive. Trend analyses of American households' debt underestimate the extent and variability of such changes.
In 1986, New Zealand introduced the Fair Trading Act, legislation aimed at consumer protection. This act was modeled after similar Australian legislation, while taking into account the legislation and precedents of other countries including the United States, England, and Canada. Although wording of different nations' legislation is often similar, unique national conditions may give rise to different interpretations. The emergence of the Act may indicate a movement toward minimal international standards in consumer protection legislation among common law countries and to a lesser extent, a large number of Western nations. This paper examines the content and performance of the Act concerning deceptive advertising. Available evidence suggests that the frequency and severity of deceptive advertising has declined. Knowledge of the New Zealand experience provides insight into the evolution of consumer protection legislation and insight for American firms planning commerce there.
This paper describes a study that assesses some changes in nutrition labels resulting from provisions of the Nutrition Labeling and Education Act of 1990 (NLEA). Type of nutrition label, nutritional value, and presence (absence) of a nutrition “warning” are tested in a between subjects experimental design. Results indicate that additional nutrition information recommended by the NLEA can significantly affect nutrition attitudes, perceptions, and self-reported product purchase likelihood.
This article provides a review of the Fair and Accurate Credit Transactions Act of 2003 (FACTA) as it relates to the growing problem of identity theft. The article also examines other identity theft-related proposed legislation from the 108th Congress and analyzes the effectiveness of the proposed measures. The authors conclude that FACTA represents an important step toward reducing the incidence of identity theft as well as ameliorating the damage that it causes. However, unless and until Congress addresses the extensive use and distribution of Social Security numbers and the safeguarding of data, identity theft is likely to continue to wreak financial and social havoc.
Today, this country is confronting a crisis in health care of broad and critical dimensions. Dwarfing all others is the issue of the consumer's right to affordable quality comprehensive health care. This paper deals first with the dimension of the health care crisis confronting this country. It considers the major proposals for health care reform. Finally, it examines the role of the consumer movement and of American Council on Consumer Interests (ACCI) in ensuring that the consumer's interest is protected in the current debate on how best to provide equitable and affordable health care to all Americans without regard to the individual's ability to pay.
As our economy now operates, consumer credit is an essential ingredient in the mass merchandising of goods and services, credit sources and users share a joint responsibility in orginating credit and both share in its beneficial effects. Thsoe had debt losses which occur are small relative to sales and are absorbed by consumers who pay in full. In this mileu, abridging the right of bankruptcy would provide negligible benefits to consumers as a whole and to the economy. It would create serious inequity between (1) consumers who avoid debt through procrastination and those who avoid it through bankruptcy and (2) consumers and business firms. The first inequity would be accentuated by present differences in state laws governing debt collection. It would still exist, however, if all states had a uniform collection law. Consumer right to bankruptcy is a needed safety-value in our credit-oriented economy.
While possessing a long and respected history as a research method, content analysis studies attempting to address issues of the consumers’ interests often are published with invalid conclusions or implications. This essay offers that the source of these problems is rooted in inferring causal relations from what is nothing more than descriptive data.
This study describes how mortgage professionals differentiate abusive from predatory lending. Data were analyzed qualitatively. The results indicate that some users of this term do not always adhere to a strict definition of predatory lending but rather use it as a term for any general mortgage abuse and mortgage fraud. Existing laws at the federal- and state-level curtail abusive lending and promote fairness in the market place and they are highly enforced among depository financial institutions. However, unregulated nonfinancial institutions, mortgage brokers, and originators are still a primary source of predatory lending.
University students on welfare, working with academic researchers, successfully lobbied for a state policy in Wyoming to define postsecondary education as work under the 1996 welfare reform law. This article describes the researchers’ use of participatory action research (PAR) in the policy arena. Consumer researchers are encouraged to consider using PAR to help make postsecondary education more available to low-income parents. New PAR studies could assist low-income consumers in analyzing the use of surplus welfare funds and new federal regulations, which now make postsecondary education a more viable option for state welfare reform policies.
This paper investigates the role of risk-benefit analysis in assessing the risk associated with a variety of consumption activities. The issue of prevailing risk is of particular importance to public policy makers who must decide what level of risk requires intervention. Risk-benefit analysis may be used in three major ways: 1) determination of the level of risk to which consumers are exposed, 2) ranking of consumption activities with respect to risk, and 3) determination of consumption activities which should be addressed by risk reduction strategies. The results of the study indicate that considerable variations exist with respect to the risk levels associated with various consumption activities. The study results also suggest that there may be a need for further government intervention in some high risk areas.