PurposeThis study aims to test the compensatory consumption theory with the explicit hypothesis that China's new-rich tend to waste relatively more food.Design/methodology/approachIn this study, the authors use Heckman two-step probit model to empirically investigate the new-rich consumption behavior related to food waste.FindingsThe results show that new-rich is associated with restaurant leftovers and less likely to take them home, which supports the compensatory consumption hypothesis.Practical implicationsUnderstanding the empirical evidence supporting compensatory consumption theory may improve forecasts, which feed into early warning systems for food insecurity. And it also avoids unreasonable food policies.Originality/valueThis research is a first attempt to place food waste in a compensatory-consumption perspective, which sheds light on a new theory for explaining increasing food waste in developing countries.

Facing increasing nonrenewable and environmental concerns with fossil power generation, renewable energy is being supported by government mechanisms. With the power generation cost of renewables generally higher than fossil fuels, determining the optimal level of these mechanisms requires an understanding of households’ prosocial behavior toward renewables. The issue is determining the magnitude households are willing to pay (WTP) for alternative renewables. Our hypothesis is this behavior varies by the type of renewable energy. As a test of this hypothesis, we apply a discrete choice experiment to measure households’ WTP. Results support our hypothesis with a positive WTP for solar energy, leading to a 62% reduction in solar subsidy, and a negative WTP for biomass and wind sources.

We investigate consumers' willingness to pay premiums for environmentally sustainably produced meat and plant-based meat substitutes. We conducted a randomized control study coupled with an incentive-compatible experimental auction. Treatment consisted of information nudges concerning the environmental and health externalities of meat production and consumption. Results show that demand for sustainably produced beef and a plant-based meat substitute is inelastic. We elicited participants' time preferences to analyze whether consumer behavior varies with their time preference. Present-biased treated female participants were willing to pay a significantly lower premium for sustainably produced beef compared to the present-biased control female participants. Future-biased treated participants had a higher probability of being willing to pay a premium for a plant-based meat substitute compared to the control group. We discuss the policy implications and relevance of information nudging, such as labeling, and how the effect of such nudging varies with participant characteristics.

Food recall is a major ingredient in food safety with existing literature focusing mainly on its direct impacts. Few studies focus on possible spillover effects. It is hypothesized that food recalls have a spillover effect on the recalled brand and purchase channel. As a test of this hypothesis, a 2-purchase channel by 3-recall strategy scenario experiment was conducted on spillover effects of a milk recall in Beijing, China. The results indicate that food-safety scares have significant negative impacts on consumers' purchase intention on the recalled brand and purchase channel, and the impacts are more significant for online than offline marketing. However, voluntary recalls by online firms help mitigate these negative effects and restore consumers' purchase intention more than offline voluntary recalls. An online food incident creates an issue of trust toward general online platforms. Online vendors should take greater care in guaranteeing food safety and actively take restorative actions such as voluntary recalls after a food safety incident. Results provide empirical evidence for industry organizations and governments to stipulate a strict food safety and incident resolution system for e-commerce.

Changing temperatures and precipitation patterns from climate change are a major risk to crop yields. Producers have technology options for mitigating this risk with one such technology termed drainage water recycling (DWR). DWR involves diverting subsurface drainage water to ponds where it is stored for later irrigation. Crop insurance may interfere with DWR adoption by providing producers with another avenue to manage climate change risk. It is hypothesized that government-subsidized crop insurance reduces climate change technology adoption. Based on real options, this analysis considers two policy regimes: when crop insurance is in effect and not. In a Poisson jump process, it further considers the insurance effect of producers' returns jumping when facing a crop disaster. Results indicate crop insurance has a minimal effect on DWR adoption, and in most scenarios, the DWR adoption thresholds are too large for a producer to invest for climate change adaptation without additional financial incentives. The baseline DWR adoption scenario, with no crop insurance impact, requires revenue of $1,114/acre, or 1.57 times current conventional revenue.

A unifying methodology is presented, which jointly considers correlated Brownian motion processes with Poisson jumps in both revenue and policy. The methodology is unique in considering price and quantity as geometric Brownian motion processes with jumps following a Poisson process in revenue from market shocks and policy uncertainty.

We estimate effects of nonfinancial incentives, combined with the notion of 'loss aversion,' on students' exam performance in two introductory economics courses. Our experiment awarded five points to students who scored below the median score on Midterm I as an incentive to improve their performance on Midterm II - these points would be lost if they failed to improve their performance. Regression discontinuity analysis indicates that this incentive improved male students' performance by 0.38 standard deviations on Midterm II.

External cost from meat consumption raises an issue of possible government mechanisms toward mitigation. Economic theory provides a framework for determining the optimal set of mechanisms considering the associated benefits and costs. Such a theoretical development rests on consumers' responsiveness to alternative mechanisms. Considering two mechanisms, a Pigouvian tax and green‐label education, yields tandem theoretical optimal government mechanisms. Populating this theoretical model with empirically derived elasticities and other parameters provides an application. Results indicate education alone will likely not yield a high social‐optimal level of mitigation. Instead, if external costs warrant government mechanisms, a Pigouvian tax will be required to move consumption toward a socially optimal state.

We show that a fixed financial incentive reduces the amount of food waste in an all-you-can-eat university-dining hall. Results indicate that the incentive increased the likelihood of students cleaning their plates, but did not affect the amount of food taken. These results raise important questions about implementing well-studied policies in modifying food consumption. An unintended consequence of the monetary incentive might have led students to consume relatively more food, thus encouraging unwanted eating habits.

Using home-scan data set from Kantar Worldpanel, we conduct an empirical study on Chinese urban consumer shopping behavior from online and offline channels, using yogurt as an example. Results confirm the advantages of E-commerce relative to traditional offline retail channel in terms of keeping consumers loyal. Results also indicate the online and offline markets are of different business models, in that the online market is a separate market from offline even for the same brand. There exists evidence of brand loyalty for online shoppers but not offline. However, it is more challenging for online late entrants to build brand loyalty because consumers are price sensitive online. Firms are recommended to think of new and differentiated products online, which focus more on quality instead of price to catch the young generation with increasing income.

An analytical framework is developed for integrating the social science into a socio-technical approach for assessing the optimal solar energy subsidy. Estimating the optimal solar subsidy based on the analytical framework takes into account technical environment, health, employment, and electricity accessibility benefits as well as household's prosocial behavior. Results indicate that an optimal subsidy is positively affected by the marginal external benefit; however, this effect is mitigated by the rebound effect based on motivational-crowding theory. Calibrating the model using published elasticities yields estimates of the optimal solar energy subsidy equal to approximately $0.02 per kilowatt-hour when prosocial behavior is omitted. The estimated optimal subsidy is in line with many current state feed-in-tariff rates, which may be the upper bound when social science is not considered in policy analysis.

An investigation of Poisson type policy jumps on biodiesel investment considers the theory of investment under uncertainty. The analysis studies the probability of implementing a policy if it is not in effect and the probability of withdrawal if it is in effect. An application models the policy-switching regime of the discontinuous U.S. federal tax credit of $1.00 per gallon on biodiesel. Results support that time inconsistent government policies do lead to market uncertainty. The analysis reveals a pronounced negative impact on decisions to invest in a biodiesel refinery. Results do indicate a consistent policy-switching regime may not be that disruptive to the emerging biodiesel industry. It is policy uncertainty that drives the option-pricing thresholds and a consistent policy switching does not increase the uncertainty.

The limited endowment of resources that usually characterised low-income households imposes a binding trade-off between current and future consumption. In many transition countries, microfinance represents the primary source of credit other than informal moneylenders for low-income households which is the situation in the Kyrgyz Republic. Thus, this study analyses the determinants of household microfinance credit allocation in Kyrgyzstan from 2006 to 2010. We model the household's behaviour through a multivariate approach to allow for multiple choices at the same time. Results indicate that mobile phone and livestock ownership were identified as two key factors which increase the probability of borrowers using microfinance credit for productive purposes. Furthermore, borrowers in the rural Naryn region, one of the poorest areas in Kyrgyzstan, have a higher probability of allocating their loans toward food purchases and the smallest probability of allocating credit toward starting a business or other productive purposes.

The major expansion of U.S. ethanol production raises concerns about the potential detrimental impacts on developing countries' agricultural prices, farm income, and food security. To assess the sensitivity of maize prices to ethanol production, this study explores the linkage between the U.S. ethanol market and developing countries' maize prices. The econometric approach, based on a panel structural vector autoregression model, captures market interdependencies and the likelihood that developing countries' responses are both heterogeneous and dynamic. The results indicate that the U.S. ethanol market's impacts on maize prices in developing countries are heterogeneous and that coastal countries are more susceptible to U.S. economic shocks. The estimates also suggest that countries more dependent on food imports and/or receiving U.S. food aid are at a higher risk of being affected by such shocks. Overall, the results indicate that those countries with the greatest sensitivity and exposure to global agricultural commodity markets could benefit from domestic policies and international assistance, which reduce their exposure to impacts from the U.S. maize market.

Over the past decade, the U.S. Southeast has experienced a rapid expansion of wood-pellet biomass production for European export. This renewable wood-pellet supply requires nonrenewable-energy inputs in its manufacturing and logistics, which suggests possible price-volatility spillovers between renewable and nonrenewable markets. A BEKK-MGARCH model is employed for investigating these possible price-volatility spillovers. Overall, results suggest a limited negative effect of past volatile nonrenewable-energy prices influencing current wood-pellet price volatility. Specifically, high volatilities in nonrenewable-energy prices do not affect the volatility of wood-pellet prices. Thus, any stability concerns in terms of nonrenewable-input prices affecting the wood-pellet market are not warranted.

Applying a regime switching model under the theoretic framework of real options, we inspect the optimal timing boundaries for coal and coal mixed wood pellets as two alternative fuels for a power plant in Georgia, United States. Results indicate that cofiring wood pellets with coal is generally not a commercially viable option. However, lower-level (with wood pellets<15%) cofiring could have been feasible during the infancy period (2009–2011) when wood pellet price was declining. Sensitivity analysis shows that our conclusions are robust and the most important factors are relative prices of coal and mixed fuel. Therefore, we reject the null hypothesis that cofiring is economically feasible and suggest using policy vehicles to stimulate the bioenergy market and meet the greenhouse gas emission reduction target. In particular, a subsidy of $1.40/mmbtu to the 10% mixed fuel or a tax of $1.50/mmbtu on coal would prompt the conversions of coal-only power plants to cofiring ones, and a subsidy of $0.45/mmbtu to the 10% mixed fuel or a tax of $0.50/mmbtu on coal would maintain existing cofiring power plants in the status quo.

In 2010, 21% of the total food available for consumption in the United States was wasted at the household level. In response to this waste, a number of counties and U.S. localities have instituted policies (disposal taxes) directed toward reducing this waste. However, currently there is no federal food-waste disposal tax. The aim of this paper is to establish a theoretical foundation for household food waste, and based on this theory, to determine the social-optimal food-waste (disposal) tax, along with a government incentive. The theory unravels the interrelation between social food insecurity and external environmental costs, which is not generally considered by households when they waste food. A social-optimal disposal tax and government incentive involve Pigovian mechanisms and governmental expenditures. For a zero level of food waste, the social-optimal disposable tax and government incentive approach infinity.

A theory of asset replacement is developed to determine the optimal timing and feasible conditions to first rejuvenate and then to replace an asset. The theoretical underpinnings mate two strands of research: asset rejuvenation and real options. With the aid of comparative statistics and numerical analysis, results are linked across deterministic and stochastic costs and matched with conventional asset replacement (no rejuvenation). The theoretical model is operationalized by applying numerical analysis to the decisions of whether to rejuvenate an aging coal-fired electricity plant and then decommission, or to simply decommission. In addition, the optimal timing of potential rejuvenation and decommission are addressed. Co-firing coal with wood pellets is considered as the rejuvenating process. In this context, it is the relative difference in virgin (coal) versus rejuvenation (co-firing) initial costs and cost growth rates that determines timing and length of time the rejuvenated plant is operated.

Time-invariant electricity pricing does not reflect daily variation in the cost of producing electricity and thus can cause economic inefficiency. Time-of-use pricing (TOU), which has higher electricity prices during peak hours and lower prices during non-peak hours, is a pricing scheme that can help achieve more efficient levels of electricity consumption. This study examines factors influencing consumers’ participation in voluntary TOU programs with particular attention to individual-specific risk and time preferences elicited through multiple price-list experiments. Evidence from a study of 398 homeowners in Arizona and California, U.S., indicates that more risk averse consumers are less likely to enroll in TOU programs. The results suggest evidence of adverse selection, with households who consume less energy during peak hours being more likely to enroll in TOU programs. Time preferences are found to have a statistically significant and negative impact on consumers’ adoption of programmable thermostats, a technology that can allow households to better respond to TOU pricing. However, we find no evidence that consumers’ decisions to enroll in TOU programs and adopt programmable thermostats are correlated. Our results have important implications for policymakers and utility companies, which attempt to increase participation in voluntary TOU programs.

U.S. ethanol expansion objectives are to improve both energy security and the environmental. However, this expansion has raised issues concerning its detrimental impacts on the price volatility of developing countries’ agricultural commodities. These concerns are addressed by empirically investigating the relations among U.S. ethanol and corn markets with developing countries’ corn prices. Results indicate that U.S. ethanol demand impacts on developing countries’ corn prices vary by country. Further, results reveal that the transmission effects of U.S. ethanol shocks are systematically stronger for countries with higher food import dependency and U.S. food aid.