Lisa L. Wood

Resources and Functions: A New View of Inequality in Australia

The degree of inequality in the levels of well-being of its citizens tells us a great deal about a society. It enables us to judge its social and economic system, to identify those citizens with a claim on community compassion, to identify the sources of hardship, and to devise strategies for reducing levels of hardship. The value of such information is undoubted. But we confront a severe practical problem in first defining, and then measuring, what we mean by well-being. It is surely multi-dimensional, and difficult to reduce to a scalar-valued index.

Stratified Models of Education Production Using Modified DEA and Regression Analysis

In their agenda for research into the determinants of organizational effectiveness, Lewin and Minton (1986, p. 531) called for studies illustrating the “feasibility of using DEA (perhaps in combination with other analytical methods) as a mathematic for relating effectiveness outcomes to features of organization design.” In this chapter, we report the initial results of just such a study. The purpose of the study is to investigate the performance of secondary education in the U.S. Performance is defined as the ability of secondary schools to convert human, physical, and financial resources into educational opportunities, and then to combine these opportunities with student input to produce both intermediate and long-term educational outcomes. At each stage, performance is measured using a modified form of data envelopment analysis (MDEA). The three sets of calculated MDEA scores are then regressed against groups of environmental variables that reflect features of the organizational design and characteristics of the student body of each secondary school in the sample. The modification to DEA and the second- stage regression analysis are structured to take into account the special distributional features of unmodified DEA scores. The empirical results suggest that a two-stage approach that augments MDEA with regression analysis provides a fruitful way of determining effectiveness outcomes and relating them to features of organizational design and the operating environment. Furthermore, regression analysis provides useful information for policymakers interested in how changes in organizational characteristics can improve school performance.

Willingness to Pay as a Measure of Health Benefits

In this paper, we discuss the use of cost-benefit analysis (CBA) for evaluating new healthcare interventions, present the theoretical basis for the use of willingness to pay as a method for valuing benefits in a CBA and describe how to obtain willingness-to-pay (WTP) measures of health benefits and how to use these values in a CBA.We review selected economic studies on consumer demand and consumer surplus and studies presenting WTP estimates for healthcare interventions. The theoretical foundations of willingness to pay as a measure of commodity value are rooted in consumer demand theory. The area under the fixed income consumer demand curve represents the consumer’s maximum willingness to pay for the commodity. We identify 3 types of potential benefits from a new healthcare intervention, namely patient benefits, option value and altruistic value, and suggest WTP questions for valuing different combinations of these benefits. We demonstrate how responses to these questions can be adjusted for income effects and incorporated into economic evaluations.We suggest that the lack of popularity of CBAs in the health area is related to the perceived difficulty in valuing health benefits as well as concern over how CBA incorporates the distribution of income. We show that health benefits can be valued using simple survey techniques and that these values can be adjusted to any desired income distribution.

Predicting participation intentions for optional energy services

In this paper we use conjoint analysis to predict participation intentions for an optional energy service offered by Niagara Mohawk Power Corporation (NMPC). In contrast to conjoint studies that use ordinary least squares regression to estimate a utility or preference function, we use an ordered probit model. For validation, we compare predicted participation from the probit model to actual behavior. We also compare predictions from Sawtooth Softwares Adaptive Conjoint Analysis (ACA) software to actual behaviour. The predictions obtained from the ordered probit model are closer to actual behaviour than the predictions obtained from the linear model. We discuss possible reasons and implications for future research.

Cost‐efficient military recruiting: An econometric approach

The near‐term likelihood of declining military manpower requirements, and of consequently reduced military budgets, will put pressure on recruitment agencies to become more cost‐efficient, or to cut back, or both. In this paper we illustrate the working of an econometric model designed to measure the cost‐efficiency of the US Army recruiting process, and to project cost‐efficient responses to expected future reductions in manpower requirements. The model assumes that the United States Army Recruiting Command attempts to minimize the cost of meeting recruiting targets, but it allows for failure, and it generates measures of the magnitude, the direction, and the cost of any such failure. The model is estimated on US Army recruiting data for CY1986‐CY1987, validated, then re‐estimated for CY1986‐CY1988, and used to project cost‐efficient responses to anticipated declines in recruiting targets.

Measuring How Customers Value Electricity Service Offers

In a competitive environment, where retail customers are free to choose electric service offers according to their preferences, cost-based pricing is inappropriate. Market-based pricing involves understanding customer preferences and offering products that match these preferences at prices that provide value to customers. This paper presents the willingness to pay (WTP) methodology as an approach for measuring how customers value electricity service offers beyond commodity electricity. While the WTP methodology is clearly a useful tool for designing and pricing electric service offers, we suggest it also yields powerful information for the critical decisions that must be made prior to the development of an offer—namely, to determine strategic positioning in the marketplace.