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Low Quality-Effective Demand

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  • Eika, Kari

    () (Dept. of Economics, University of Oslo)

Abstract

Sub-standard quality is a recurrent problem within parts of the human services - in the care for frail elderly, mentally ill, the intellectually disabled, and children in need - and within law enforcement. Service quality is of great concern to the individual, and the larger society. If so important, why then is it so difficult to attain? I address this issue introducing the notion of low quality-effective demand (QED). Low QED is signified either by asymmetric information or weak consumer sovereignty, or a combination. In the standard principal-agent problem the principal may have poor information about the service quality that the agent provides, but has full incentives to monitor. With weak consumer sovereignty the service recipient cannot function as the principal, lacking the ability or the authority to monitor quality. With the U.S. nursing home sector as one particular case, I demonstrate how a better understanding of weak consumer sovereignty and low QED is important to improve the problematic quality of the human services.

Suggested Citation

  • Eika, Kari, 2003. "Low Quality-Effective Demand," Memorandum 36/2003, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2003_036
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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2003/Memo-36-2003.pdf
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    References listed on IDEAS

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    1. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
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    4. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1127-1161.
    5. Nancy Folbre & Julie A. Nelson, 2000. "For Love or Money--Or Both?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 123-140, Fall.
    6. Hirth, Richard A., 1999. "Consumer information and competition between nonprofit and for-profit nursing homes," Journal of Health Economics, Elsevier, vol. 18(2), pages 219-240, April.
    7. Grabowski, David C. & Hirth, Richard A., 2003. "Competitive spillovers across non-profit and for-profit nursing homes," Journal of Health Economics, Elsevier, vol. 22(1), pages 1-22, January.
    8. Kenneth J. Arrow, 1996. "Information, Responsibility, and Human Services," NBER Chapters,in: Individual and Social Responsibility: Child Care, Education, Medical Care, and Long-Term Care in America, pages 229-244 National Bureau of Economic Research, Inc.
    9. Gertler, Paul J., 1989. "Subsidies, quality, and the regulation of nursing homes," Journal of Public Economics, Elsevier, vol. 38(1), pages 33-52, February.
    10. Jenni, Karen E & Loewenstein, George, 1997. "Explaining the "Identifiable Victim Effect."," Journal of Risk and Uncertainty, Springer, vol. 14(3), pages 235-257, May-June.
    11. John A. Nyman, 1988. "Excess Demand, the Percentage of Medicaid Patients, and the Quality of Nursing Home Care," Journal of Human Resources, University of Wisconsin Press, vol. 23(1), pages 76-92.
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    13. repec:hrv:faseco:30727607 is not listed on IDEAS
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    Cited by:

    1. Eika, Kari, 2004. "When quality today affects service needs tomorrow," Memorandum 18/2004, Oslo University, Department of Economics.

    More about this item

    Keywords

    Human services; law enforcement; service quality;

    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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