Archive for the ‘consumer issues’ Category

A comparison of purchasing power around the globe

September 19, 2012 Comments off

A comparison of purchasing power around the globe (PDF)

Source: UBS

Oslo, Zurich and Tokyo most expensive Our survey shows that Oslo, Zurich and Tokyo are the most expensive cities in the world. Prices for many goods and services are lowest in the two Indian metropolises of Delhi and Mumbai. Taking rent into account as well, the rankings remain unchanged. Tokyo has ousted Copenhagen to take third place in our price rankings compared with 2009. One remarkable finding is that when rents are included, relative price levels compared to New York move down in all cities except Hong Kong.

At the regional level, the three frontrunners Oslo, Zurich and Tokyo differ from the general picture in their respective regions. Oslo and Zurich are around 20% above Western European price levels, while Tokyo is a full 50% more expensive than the majority of cities in Asia. By contrast, the general picture for cities in Africa as well as in Oceania is relatively uniform.

How do shifts in price levels come about?

The top and bottom places in the rankings are currently occupied by the same cities as three years ago. There have been a number of major changes in the middle group, however.

Our analysis shows that changes in inflation and especially in exchange rates are the key factors that bring about shifts in price levels calculated in US dollars. For instance, the New Zealand and Australian dollars appreciated strongly against the US dollar, leading to a marked rise in US dollar price levels in Auckland and Sydney.

The index of Moscow also gained due to currency appreciation, further amplified by general price inflation. On the other hand, Dublin experienced a relative decline in the price index due to the financial and euro crisis.

Research updates on private student loans

September 13, 2012 Comments off

Research updates on private student loans

Source: Consumer Financial Protection Bureau

Last month, we released a report to Congress with the Department of Education on the private student market. This report helped shed light on how the private student loan market works and where there are opportunities for improvement.

When we design a form or develop a regulation, we work to gather continuous feedback. The same goes for our reports. Since releasing the private student loan report, we’ve been talking to researchers, consumer groups, and industry players to share our results and get feedback. Based on this feedback, we developed ways to make better estimates on certain market statistics, particularly in areas where our data set was incomplete.

While there aren’t any changes to the key findings and recommendations, we released an update today to reflect new methodologies our research team used to calculate some statistics in the report: first, the proportion of private student loan borrowers who exhausted their Federal Stafford Loan options; and second, the extent to which schools certified a borrower’s need for a private student loan.

Compared to the original estimates, the update shows that the number of borrowers who exhausted their federal options is lower than our original estimate, and the level of school certification is higher.

Plan Participation in Health Insurance Exchanges: Implications for Competition and Choice

September 11, 2012 Comments off

Plan Participation in Health Insurance Exchanges: Implications for Competition and Choice

Source: Urban Institute

This brief examines the conditions under which competition in health insurance exchanges is likely to be effective in placing downward pressure on insurance premiums. We conclude that areas with a single dominant insurer or a dominant hospital system are less likely to experience effective competition. In markets in which there are several insurers with significant market share and no dominant hospital system, the result could be limited or tiered network products that could successfully constrain the cost of premiums. Participation of existing Medicaid plans may also increase effective competition in health insurance exchanges.

Foreclosure Externalities: Some New Evidence

September 11, 2012 Comments off

Foreclosure Externalities: Some New Evidence

Source: Federal Reserve Bank of Atlanta

In a recent set of influential papers, researchers have argued that residential mortgage foreclosures reduce the sale prices of nearby properties. We revisit this issue using a more robust identification strategy combined with new data that contain information on the location of properties secured by seriously delinquent mortgages and information on the condition of foreclosed properties. We find that while properties in virtually all stages of distress have statistically significant, negative effects on nearby home values, the magnitudes are economically small, peak before the distressed properties complete the foreclosure process, and go to zero about a year after the bank sells the property to a new homeowner. The estimates are very sensitive to the condition of the distressed property, with a positive correlation existing between house price growth and foreclosed properties identified as being in "above average" condition. We argue that the most plausible explanation for these results is an externality resulting from reduced investment by owners of distressed property. Our analysis shows that policies that slow the transition from delinquency to foreclosure likely exacerbate the negative effect of mortgage distress on house prices.

The Cyclicality of Sales, Regular and Effective Prices: Business Cycle and Policy Implications

September 11, 2012 Comments off

The Cyclicality of Sales, Regular and Effective Prices: Business Cycle and Policy Implications

Source: International Monetary Fund

We study the cyclical properties of sales, regular price changes and average prices paid by consumers ("effective" prices) in a dataset containing prices and quantities sold for numerous retailers across a variety of U.S. metropolitan areas. Both the frequency and size of sales fall when local unemployment rates rise and yet the inflation rate for effective prices paid by consumers declines significantly with higher unemployment. This discrepancy can be reconciled by consumers reallocating their expenditures across retailers, a feature of the data which we document and quantify. We propose a simple model with household shopping effort and store-switching consistent with these stylized facts and document its implications for business cycles and policymakers.

Joint Optimization of Bid and Budget Allocation in Sponsored Search

September 10, 2012 Comments off

Joint Optimization of Bid and Budget Allocation in Sponsored Search
Source: Microsoft Research

This paper is concerned with the joint allocation of bid price and campaign budget in sponsored search. In this application, an advertiser can create a number of campaigns and set a budget for each of them. In a campaign, he/she can further create several ad groups with bid keywords and bid prices. Data analysis shows that many advertisers are dealing with a very large number of campaigns, bid keywords, and bid prices at the same time, which poses a great challenge to the optimality of their campaign management. As a result, the budgets of some campaigns might be too low to achieve the desired performance goals while those of some other campaigns might be wasted; the bid prices for some keywords may be too low to win competitive auctions while those of some other keywords may be unnecessarily high. In this paper, we propose a novel algorithm to automatically address this issue. In particular, we model the problem as a constrained optimization problem, which maximizes the expected advertiser revenue subject to the constraints of the total budget of the advertiser and the ranges of bid price change. By solving this optimization problem, we can obtain an optimal budget allocation plan as well as an optimal bid price setting. Our simulation results based on the sponsored search log of a commercial search engine have shown that by employing the proposed method, we can effectively improve the performances of the advertisers while at the same time we also see an increase in the revenue of the search engine. In addition, the results indicate that this method is robust to the second-order effects caused by the bid fluctuations from other advertisers.

The problem-solving service worker: Appraisal mechanisms and positive affective experiences during customer interactions

September 9, 2012 Comments off

The problem-solving service worker: Appraisal mechanisms and positive affective experiences during customer interactions

Source: Human Relations

Affective Events Theory suggests customer interactions elicit event appraisals that, in turn, prompt affective reactions in employees. A qualitative diary study was used to examine the daily events and cognitive appraisals that elicit positive emotions during customer service interactions. Thematic analysis of the diary contents of 276 sales employees from a variety of industries (874 positive events) showed helping customers solve their problem was the event most likely to trigger positive emotions. The data and resulting model revealed that particular configurations of employees’ appraisals predicted particular emotion(s). Within-person differences in cognitive appraisals also helped explain why some initially negative events may ultimately become a positive experience. Emotional contagion was found, where the positive emotions of the sales employees, or those of the customer, influenced the emotion of the other. The implications of the study for employees’ happiness and well-being, and for enhanced customer service relations, are discussed.

See: Customer service is an emotional experience (EurekAlert!)

CRS — Weather-Related Power Outages and Electric System Resiliency

September 6, 2012 Comments off

Weather-Related Power Outages and Electric System Resiliency (PDF)

Source: Congressional Research Service (via Federation of American Scientists)

High winds, especially when combined with precipitation from seasonal storms, can cause damage to electricity utility systems, resulting in service interruptions to large numbers of electricity customers. While most such power outages are caused by damage from trees and tree limbs falling on local electricity distribution lines and poles, major power outages tend to be caused by damage to electricity transmission lines which carry bulk power long distances. Depending on the severity of the storm and resulting impairment, power outages can last a few hours or extend to periods of several days, and have real economic effects. Power outages can impact businesses (primarily through lost orders and damage to perishable goods and inventories), and manufacturers (mainly through downtime and lost production, or equipment damage). Data from various studies lead to cost estimates from storm-related outages to the U.S. economy at between $20 billion and $55 billion annually. Data also suggest the trend of outages from weather-related events is increasing.

Suggested solutions for reducing impacts from weather-related outages include improved treetrimming schedules to keep rights-of-way clear, placing distribution and some transmission lines underground, implementing Smart Grid improvements to enhance power system operations and control, inclusion of more distributed generation, and changing utility maintenance practices and metrics to focus on power system reliability. However, most of these potential solutions come with high costs which must be balanced against the perceived benefits.

A number of options exist for Congress to consider which could help reduce storm-related outages. These range from improving the quality of data on storm-related outages, to a greater strategic investment in the U.S. electricity grid. Congress could empower a federal agency to develop standards for the consistent reporting of power outage data. While responsibility for the reliability of the bulk electric system is under the Federal Energy Regulatory Commission (as per the Energy Policy Act of 2005), no central responsibility exists for the reliability of distribution systems. One possible option could be to bring distribution systems under the Electric Reliability Organization for reliability purposes. Recovery after storm-related outages might be enhanced by a federal role in formalizing the review or coordination of electric utility mutual assistance agreements (MAAs). This would not necessarily mean federal approval of MAAs, but may help in the cooperative coordination of additional federal and state resources, especially in a wide, multi-state weather event. While there has been much discussion of transmission system inadequacies and inefficiencies, many distribution systems are in dire need of upgrades or repairs. The cost of upgrading the U.S. grid to meet future uses is expected to be high, with the American Society of Civil Engineers estimating a need of $673 billion by 2020. While the federal government recently made funding available of almost $16 billion for specific Smart Grid projects and new transmission lines under the American Recovery and Reinvestment Act of 2009, there has not been a comprehensive effort to study the needs, set goals, and provide targeted funding for modernization of the U.S. grid as part of a long-term national energy strategy. Such an effort would also require decisions about the appropriate roles of government and the private sector.

Power delivery systems are most vulnerable to storms and extreme weather events. Improving the overall condition and efficiency of the power delivery system can only serve to improve the resiliency of the system, and help hasten recovery from weather-related outages. Ultimately, however, electric utilities are responsible for this infrastructure. They are in the business of selling electricity, and they cannot sell electricity if their power delivery systems are out of service.

Privacy and Data Management on Mobile Devices

September 6, 2012 Comments off

Privacy and Data Management on Mobile Devices

Source: Pew Internet & American Life Project

More than half of mobile application users have uninstalled or avoided certain apps due to concerns about the way personal information is shared or collected by the app, according to a nationally representative telephone survey conducted by the Pew Research Center’s Internet & American Life Project.

In all, 88% of U.S. adults now own cell phones, and 43% say they download cell phone applications or “apps” to their phones. Among app users, the survey found:

  • 54% of app users have decided to not install a cell phone app when they discovered how much personal information they would need to share in order to use it
  • 30% of app users have uninstalled an app that was already on their cell phone because they learned it was collecting personal information that they didn’t wish to share

Taken together, 57% of all app users have either uninstalled an app over concerns about having to share their personal information, or declined to install an app in the first place for similar reasons.

Are Organic Foods Safer or Healthier Than Conventional Alternatives?: A Systematic Review

September 4, 2012 Comments off

Are Organic Foods Safer or Healthier Than Conventional Alternatives?: A Systematic Review
Source: Annals of Internal Medicine

Background: The health benefits of organic foods are unclear.

Purpose: To review evidence comparing the health effects of organic and conventional foods.

Data Sources: MEDLINE (January 1966 to May 2011), EMBASE, CAB Direct, Agricola, TOXNET, Cochrane Library (January 1966 to May 2009), and bibliographies of retrieved articles.

Study Selection: English-language reports of comparisons of organically and conventionally grown food or of populations consuming these foods.

Data Extraction: 2 independent investigators extracted data on methods, health outcomes, and nutrient and contaminant levels.

Data Synthesis: 17 studies in humans and 223 studies of nutrient and contaminant levels in foods met inclusion criteria. Only 3 of the human studies examined clinical outcomes, finding no significant differences between populations by food type for allergic outcomes (eczema, wheeze, atopic sensitization) or symptomatic Campylobacter infection. Two studies reported significantly lower urinary pesticide levels among children consuming organic versus conventional diets, but studies of biomarker and nutrient levels in serum, urine, breast milk, and semen in adults did not identify clinically meaningful differences. All estimates of differences in nutrient and contaminant levels in foods were highly heterogeneous except for the estimate for phosphorus; phosphorus levels were significantly higher than in conventional produce, although this difference is not clinically significant. The risk for contamination with detectable pesticide residues was lower among organic than conventional produce (risk difference, 30% [CI, −37% to −23%]), but differences in risk for exceeding maximum allowed limits were small. Escherichia coli contamination risk did not differ between organic and conventional produce. Bacterial contamination of retail chicken and pork was common but unrelated to farming method. However, the risk for isolating bacteria resistant to 3 or more antibiotics was higher in conventional than in organic chicken and pork (risk difference, 33% [CI, 21% to 45%]).

Limitation: Studies were heterogeneous and limited in number, and publication bias may be present.

Conclusion: The published literature lacks strong evidence that organic foods are significantly more nutritious than conventional foods. Consumption of organic foods may reduce exposure to pesticide residues and antibiotic-resistant bacteria.

Rising prices greatest factor in grocery purchase decisions

September 2, 2012 Comments off

Rising prices greatest factor in grocery purchase decisions

Source:  Nielsen
Eight-five percent of respondents to a Nielsen global online survey say that rising food prices are impacting their choice of grocery purchases, with more than half (52%) stating higher prices are a major influence. But price is not the only consideration that weighs heavily on the minds of consumers when shopping for groceries. Health factors, product availability and in-store services are also important considerations.
New findings from a Nielsen online survey of respondents from 56 countries around the world provide insights into how 16 various factors have impacted grocery purchases in the last year. Manufacturers and retailers armed with this knowledge can fine-tune strategies to better align with what matters most to consumers—and what does not.

Free registration required to download full report.

Consumer Price Index data quality: how accurate is the U.S. CPI?

September 2, 2012 Comments off

Consumer Price Index data quality: how accurate is the U.S. CPI?
Source: Bureau of Labor Statistics

The Consumer Price Index (CPI) is an estimate of the average change in prices over time paid by urban consumers for a market basket of consumer goods and services in the United States. The CPI is used extensively in many different ways, including three major uses: to adjust historical data, to escalate federal payments and tax brackets, and to adjust rents and wages. It directly affects the lives of Americans, so it must be as accurate as possible. But how accurate is it? If, for example, the CPI measures annual inflation as 2.3 percent, how confident can we be in that estimate?

This issue of Beyond the Numbers looks at some different ways the U.S. Bureau of Labor Statistics (BLS) has responded to questions about the accuracy and precision of the CPI. The first section examines the sampling error of the CPI, and the second section discusses possible sources of bias in the index.

How parents use time and money

August 29, 2012 Comments off

How parents use time and money
Source: Bureau of Labor Statistics

The time pressures faced by working wives have led economists to predict that market goods and services would be substituted for those produced at home. Earlier research using Consumer Expenditure data found that a wife’s employment status (full time, part time, or not employed) had some influence on her family’s purchases of market goods and services, but other factors, such as family income and the wife’s education, were more influential.

Current Population Survey data show that, among married-couple families with children under 18 in 2009, both the wife and the husband worked for pay in 58.9 percent of these families.

This article examines weekday resource allocation decisions of married couples with a husband employed full time and with children under 18. These decisions relate, among other things, to working for pay; doing unpaid household work; purchasing services such as childcare, laundry and drycleaning, and food away from home; and eating out. Information about spending decisions was obtained from the 2009 Consumer Expenditure Survey (CE) and information about time use was obtained from the 2009 American Time Use Survey (ATUS).

Results show that,

  • Regardless of employment status, wives were more likely than husbands to spend time in household activities.
  • On an average weekday, married fathers spent more time working than married mothers did, even married mothers employed full time.
  • The proportion of families reporting childcare expenses and the average amount spent by those reporting were highest for families with full-time working wives and lowest for families with wives not employed for pay.
  • Consistent with other research, working-wife families did not spend more on housekeeping and laundry services than did families with wives not employed for pay.
  • Families with full-time working wives spent the greatest dollar amount on food away from home, but there was no significant difference in spending between families with part-time working wives and families with wives not employed for pay.

2011 Report Details Consumer Bankruptcy Filings

August 27, 2012 Comments off

2011 Report Details Consumer Bankruptcy Filings
Source: U.S. Courts

A 2011 statistical report on debtors with primarily consumer debt filing for bankruptcy shows an 11 percent drop in case filings, a 23 percent drop in filer assets, 25 percent drop in filer liabilities and a 28 percent incidence of repeat filers.

The report, required by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), includes statistics on debtors who are individuals seeking debt relief under chapters 7, 11, and 13. It is compiled by the Administrative Office of the United States Courts.

Defending Junk-Debt-Buyer Lawsuits

August 27, 2012 Comments off

Defending Junk-Debt-Buyer Lawsuits
Source: Social Science Research Network

Junk debt buyer lawsuits have overwhelmed the courts all across the United States. These lawsuits wreak havoc on consumers and their families. Often overlooked is the fact that judgments against consumers which are based on junk debt are part of a zero sum game, where every bogus judgment deprives a legitimate creditor of the chance to get paid from scarce resources. Thus, the legitimate creditor to whom money is owed is materially harmed by the junk debt buyer who extracts money based on an illegitimate claim, or who causes someone to declare bankruptcy. Providing representation to this otherwise unrepresented population will not only help individual consumers. It could improve the entire U.S. economy, by preserving precious resources to pay what is legitimately owed, and avoiding paying for what is not. This article surveys the landscape of the junk debt buyer industry and provides advice for consumer advocates engaged in the battle against unscrupulous junk debt buyers.

How America Gives

August 20, 2012 Comments off

How America Gives

Source: Chronicle of Philanthropy

From America’s Generosity Divide:

The nation’s generosity divide is vast, according to a new Chronicle of Philanthropy study that charts giving patterns in every state, city, and ZIP code.

In states like Utah and Mississippi, the typical household gives more than 7 percent of its income to charity, while the average household in Massachusetts and three other New England states gives less than 3 percent.

The same holds for the nation’s 50 biggest metropolitan areas. The Chronicle found that residents of Salt Lake City, Memphis, and Birmingham, Ala., typically give at least 7 percent of their discretionary income to charity, while those in Boston and Providence average less than 3 percent. (See our interactive tool to find giving data for any place in the United States.)

To account for sharp differences in the cost of living across America, The Chronicle’s study compared generosity rates after residents paid taxes, housing, food, and other necessities.

The study, based on the most recent available Internal Revenue Service records of Americans who itemized their deductions, examines taxpayers who earned $50,000 or more in 2008. They donated a median of 4.7 percent of their discretionary income to charitable causes. Altogether, they provided $135-billion to charity, nearly two-thirds of the $214-billion donated by all individuals in 2008, according to “Giving USA,” the benchmark of giving patterns.

FTC Tells Consumers They May Be Due a Refund If They Purchased Disney- or Marvel Hero-themed Children’s Vitamins

August 19, 2012 Comments off

FTC Tells Consumers They May Be Due a Refund If They Purchased Disney- or Marvel Hero-themed Children’s Vitamins
Source: Federal Trade Commission

Have you purchased Disney- or Marvel Hero-themed vitamins for your kids during the last few years – vitamins that featured characters such as the Disney Princesses, Winnie the Pooh, Finding Nemo, and Spider-Man? If so, the Federal Trade Commission wants you to know that you may be due a refund.

The FTC is providing these refunds as a result of a settlement with a vitamin marketer named NBTY Inc. and two subsidiaries, which agreed to pay $2.1 million to settle charges that they made false health claims about their multivitamins.

The vitamins were sold by major retailers such as CVS Pharmacy, Wal-Mart, Target, Walgreens, Kroger, Kmart, Meijer, and Rite Aid, as well as online. The FTC urges consumers who believe they may have purchased them between May 1, 2008 and September 30, 2010, to file a claim online, or call 866-224-4336 and request a paper claim form in the mail. Eligible consumers will have until October 12, 2012 to file their claims.

Deloitte Survey: Back-to-School Shoppers Ready to Spend, Prepared for Higher Prices at Checkout

August 18, 2012 Comments off

Deloitte Survey: Back-to-School Shoppers Ready to Spend, Prepared for Higher Prices at Checkout
Source: Deloitte

Consumers’ days of cutting back-to-school spending are behind them, and shoppers are reverting to more traditional information sources to study up before heading to the store, according to Deloitte’s annual “Back-to-School” survey, released today.

Nearly 9 in 10 (88 percent) consumers surveyed plan to spend the same or more on back-to-school shopping this year, with higher prices a contributing factor for some families. Among those who plan to spend more this year (34 percent), nearly 6 in 10 (58 percent) cite higher prices as their reason for doing so and more than one-third (34 percent) say their children need more expensive items than last year.

Despite these intentions, few intend to forego the tradition of setting a budget or looking for a sale. Nearly 6 in 10 (59 percent) consumers have a budget in mind for back-to-school shopping, and while two-thirds (66 percent) say they will shop for items on sale, fewer respondents feel stores are offering them more value for their money (36 percent in 2012 versus 47 percent in 2011).

The social economy: Unlocking value and productivity through social technologies

August 16, 2012 Comments off

The social economy: Unlocking value and productivity through social technologies
Source: McKinsey and Company

In a few short years, social technologies have given social interactions the speed and scale of the Internet. Whether discussing consumer products or organizing political movements, people around the world constantly use social-media platforms to seek and share information. Companies use them to reach consumers in new ways too; by tapping into these conversations, organizations can generate richer insights and create precisely targeted messages and offers.

While 72 percent of companies use social technologies in some way, very few are anywhere near to achieving the full potential benefit. In fact, the most powerful applications of social technologies in the global economy are largely untapped. Companies will go on developing ways to reach consumers through social technologies and gathering insights for product development, marketing, and customer service. Yet the McKinsey Global Institute (MGI) finds that twice as much potential value lies in using social tools to enhance communications, knowledge sharing, and collaboration within and across enterprises. MGI’s estimates suggest that by fully implementing social technologies, companies have an opportunity to raise the productivity of interaction workers—high-skill knowledge workers, including managers and professionals—by 20 to 25 percent.

Top 10 back-to-school trends for 2012

August 15, 2012 Comments off

Top 10 back-to-school trends for 2012

Source: National Retail Federation

The tardy bell will be ringing sooner than we know it. Parents, kids and retailers have one thing on their minds: back-to-school shopping. According to the National Retail Federation, combined K-12 and college spending will reach a record $83.8 billion. That’s quite a few colored pencils and new backpacks.

See also: NRF Back to School Headquarters


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