Economic Journal of Development Issues

What’s Wrong with Economics? A Primer for the Perplexed

Chakra Bahadur Khadka — Thu, 31 Dec 2020 00:00:00 +0000

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Analyzing Willingness to Pay for Improved Tap Water Quality: A Case of Kathmandu Valley of Nepal

Arjun Kumar Thapa, Babu Kaji Thapa — Thu, 31 Dec 2020 00:00:00 +0000

Solving chronic drinking water shortage problem of Kathmandu Valley has been finally achieved after arduous two decades of effort of Melamchi Water supply project. At this moment, though it is futile to ask economic worthiness of this national pride project but there is still ample room to investigate ability and willingness to shoulder such lumpy financial burden by ultimate beneficiaries of potable water in Kathmandu valley. Accordingly, this paper intends to measure and investigate the factors affecting household’s willingness to pay for improved water supply. The study enumerated 4941 households falling under Kathmandu Upatyaka Khanepani Limited (KUKL) service areas during 2015 to 2016 period. It incorporated contingency valuation (CV) tools to estimate willingness to pay by residents. We applied ordinal logistic regression model to analyze the major determinants of WTP for improved water supply system and measured different elasticity on the base of simple OLS using STATA version 12. The findings show that a third of households are headed by females, while the average family size and families per building are 5.2 and 9.6 persons respectively; all above national average. The reported major source of water by residents in the study area are Kathmandu Upattyaka Khanepani Limited (KUKL) (36%), jar water (20%), tanker (15%); and well/Kuwa and handpump (20%); while total expenditure in Nepalese Rupees (NRs) is 1314 per household per month. The willingness to pay for KUKL’s improved water by the household is NRs 404, just over 2.5 times the mean current KUKL tariff (NRs. 155) per month. The ordinal logistic regression result shows household current quantity of water utilization, price of jar water, income and perceived water quality and waterborne diseases as major determinants of WTP for improved water supply. The odds of paying higher WTP for improved water supply are significantly positive for aforementioned factors except the price of jar (which affects negatively). The income inelastic (<1) demand for KUKL’s water demand signifies water as basic necessity commodity and proportion of income spent is small. The negative signs of coefficients of cross elasticity of KUKL water demand with respect to prices of jar water and tanker supplied water indicates that jar water and tanker water as strong substitutes of KUKL supply system. The study concluded that the low WTP for improved KUKL’s water supply in comparison to current total water expenditure is ‘wait and see’ signal for KUKL authorities and government. The study infers that KUKL needs to win confidence of its consumers in terms of sufficiency, regularity and quality before scaling up water tariffs.

Factors Influencing the Income of Urban Informal Workers: Evidence from Nepal

Dipak Bahadur Adhikari — Thu, 31 Dec 2020 00:00:00 +0000

Due to lack of formal job and flexible nature of informal work, large number of workers are attracted into the informal sector in developing countries. The paper examines the case of urban Nepal to study the impact of informal sector in the incomes and livelihood of such workers. This paper is based on cross-sectional data that was collected in 2020 in all six metropolitan cities of Nepal. The fixed income determination multiple regression model focuses on how the income of informal workers have been affected by various choice variables. Mostly, people of prime working age and early working age are involved in this sector. The empirical results show that the average annual earnings of the respondents was very close to national minimum wage. Most of the selected explanatory variables were significant with positive sign associated with higher level of annual income.

Consumers’ Decision on Perspective of Rationality Economics and Willingness to Demand Health Insurance

Isha Tachhekar, Chakra Bahadur Khadka — Thu, 31 Dec 2020 00:00:00 +0000

Behavioral economics responds that individuals frequently do not act rationally in the economic logic. This research specifies a review of behavioral economics and shows the use in health care to improve individuals’ decisions and demand for health insurance. The purpose of this study is to examine the factors of consumer behavior that impact their perception of health insurance and their willingness to purchase health insurance. The data collection is performed through an internet survey with the use of a self-administered questionnaire comprising ranking and Likert scale questions. Data has been reduced using a random mapping supplementary method. The original accuracy final dimensionality is sufficiently large and thus only 100 sample sizes have been used. The data was analyzed through different descriptive statistical tools and structural equation modeling was used to show the causal relationship between the identified variables. Most of the identified factors were expected to significantly impact the consumer’s willingness to purchase. Among the factors, the most important factor was found to be the consumer’s perception which was found to have a significant mediation role on features of the policy, attributes of the company, and governmental role. Also, there was found to be a significant mediation role of individual background on the relationship between personal perception and willingness to purchase health insurance. In conclusion, insurance companies and the government should take a joint initiative in conducting awareness programs
on risk management through health insurance. The existing health insurance products should be redesigned focusing on the perpetual factors that increase the likelihood of willingness to purchase. The government should actively monitor insurance practitioners to control as well as innovate suitable, adequate, and affordable health insurance plans.

Economics of Carnation Cut Flower Production in Kathmandu Valley, Nepal

Pawan Singh Bhandari, Thakur Bhattarai — Thu, 31 Dec 2020 00:00:00 +0000

Carnation is an important cut flower commercially traded in Kathmandu Valley. It has high demand in the Kathmandu Valley’s floriculture market due to its physical characteristics and its suitability to be used singly or in combination with other flowers. This examines the economics of carnation cut flower production in Kathmandu Valley. The data for the study was collected from a sample of 15 carnation cut flower producers in Kathmandu Valley. Simple random sampling technique was employed to select the respondents. Information from the respondents collected through semi-structured interview schedule. Data collected through personal interview and secondary sources was analyzed by applying descriptive statistical tools. Data analysis focused mainly on the costs and returns from the carnation production, trends in production and prices, present problems in production and future prospects of carnation production in Kathmandu Valley. The findings revealed that the profits from carnation cut flower were satisfactory to the producers. However, there were ample areas of improvements in the production system. Given the high degree of demand and increasing trend of imports, concerted efforts must be made to reverse the situation and become self-reliant in fulfilling the demand for carnation cut flowers alongside exporting to other countries in the future.

Assessing the COVID-19 and Its Shocks on Macro-economic Variables in Nepal

Raghu Bir Bista — Thu, 31 Dec 2020 00:00:00 +0000

This study assesses the COVID-19 and its shocks on macro-economic variables in Nepalese economy based on the secondary data sets of macroeconomics variable pre- and post-COVID-19 by applying descriptive statistical methods. The growth of COVID-19 is unpredictably spreading all over the world. Its hot spot has been in the South Asia, particularly in Delhi and Nepal. Its correlation between COVID 19 cases and per capita GDP is positive. In South Asia, its growth rate is higher than its recovery indicating inefficiency of health system. Similarly, its shocks are so strong to influence trend, pattern and structure of macro-economic variables. Economic growth declined at 0.1percent in 2020 with falling outputs of agriculture, industry and service sectors. Unemployment rate reaches at 27.8 percent from 11.4 percent. The poor population increased by 7.47 percent. Besides, residential income and household income has fallen along with sharp decline in labor and remittance income. Lastly, its negative implication is found in foreign exchange reserve and balance of payment, trade and revenue. Thus, the COVID-19 and its shocks are undesired fluctuations and impose implications in Nepalese economy. Therefore, Nepal should improve health care system and vaccine availability for reducing the effects of pandemic and the lockdown for stability and recovery of the economy and also for welfare of the poor.

Determinants of Outmigration: A Micro-econometric Analysis

Sabitri Devi Acharya — Thu, 31 Dec 2020 00:00:00 +0000

Remittances, what foreign workers send back to their home countries, have grown not only in size but in importance for many developing countries. Remittances are integral to migration because one of the basic motives for migrating is to remit a portion of earnings to the communities of origin or households. Remittances, as part of the migration process, can be viewed as a family income maximisation strategy. The general objective of this study is to examine the determinants of outmigration at household level. The study adopts the micro- econometrics research design by utilizing cross-sectional household survey data. Two types of factors: pull and push factors drive outmigration. The findings indicate that education, ecological belt, consumption quintile, access to government facilities and the ratio of food expenditure to total expenditures are determinants of outmigration.

Choice of Regression Models in Time Series Data

Siddha Raj Bhatta, Pujan Adhikari, Rohan Byanjankar — Thu, 31 Dec 2020 00:00:00 +0000

Time series data possess distinct properties compared to cross section data. They have high temporal dependence, trend component and may have seasonal as well as cyclical patterns. A much-discussed issue in time series data is non-stationarity that highly influences the efficiency and consistency of regression estimates. In addition, time series regressions are most likely to suffer from spurious relationship. Thus, correct choice should be made regarding the regression models to obtain consistent estimates of the parameters and avoid spurious regression. This paper discusses the properties of time series data and the choice of appropriate regression models specifically in the context of finite samples. By discussing the relative strengths and limitations of the regression models that are used in time series data, this paper aims to contribute to the selection framework of regression models in time series analysis.