Research seminar: '30 years of being wrong': Reviewing the approach to quality-adjusted prices in demand analysis
04 October 2017
An economics research seminar on Thursday, 12 October will examine the traditional approach to quality-adjusted prices in demand analysis - and why it doesn't work.
All postgraduate students, staff and and alumni are invited to attend this free seminar at 1pm, hosted by Waikato Management School. No RSVP required, just turn up on the day.
The full title of the seminar is '30 years of being wrong: A systematic review and critical test of the Cox and Wohlgenant (1986) approach to quality-adjusted prices in demand analysis.'
"Consumers respond to price rises by reducing quantity consumed, but also by downgrading the quality of what they consume," says Professor Gibson. "If the response of quality to price is ignored, empirical estimates of the price elasticity of quantity demand will conflate responses on the quantity and quality margins and will overstate the effect of price on quantity."
Professor Gibson says this exaggeration effect matters because policy-makers have a growing interest in policies that use taxes and subsidies to alter food prices and induce a switch towards healthier diets.