FINAL Flashcards
(134 cards)
1
Q
Public Policy
A
- Process through which we make collective decisions that are
binding upon all affected parties, whether they agree with the
ultimate decision or not. - Process by which a society makes and enforces decisions on what
behavior is acceptable and what is not.
-Act collectivity in the hope of making the relevant group better off.
2
Q
Policy Analysis
A
A set of tools to analyze a social problem and implement a solution that is both effective and politically feasible
3
Q
1st Step of the Policy Process
A
1) Identify the potential benefit
- What is the public problem? What benefit, or reduction in harm, could be realized?
- 3 common pitfalls:
1) vague or conflicting goals
2) confusing intermediate measures with the real outcome of interest
3) aiming for a whole loaf when the political timing is better for six slices (ambition v. feasibility)
4
Q
Steps of the Policy Process
A
1) Identify the potential benefit
2) Analyze why the market is not delivering a desirable outcome
3) Identify the relevant institutions
4) Evaluate policy options
5) Assess the political landscape
6) Make a policy decision
7) Build a coalition
8) Monitor, enforce, fix, expand
5
Q
Recommending a Policy Change
A
Who will be affected? How will they respond?
6
Q
Stakeholder Analysis
A
1) Law of Unintended Consequences: the idea that policies that are intended to have a beneficial effect on society may provide for unintended resulting behaviors that detract from policy effectiveness.
- Ex) Gas Guzzler Tax: excise tax that was meant to punish inefficient cars, but exempted SUVs and Pickups (which have worse gas milage), and therefore inadvertently encouraged producers to supply more inefficient cars
2) Perverse Incentives: reward systems that inadvertently lead to unintended and undesirable consequences, often contradicting the initial goals
- Ex) Bounty on Cobra Heads led to people breeding them
3) Distributional Effects: how the gains and costs of a particular policy or event are distributed among different groups in society
7
Q
Direct/Monetary Policy Action
A
Provide/Purchase
8
Q
Nonmonetary/Direct Policy Action
A
Prohibit/Require
9
Q
Monetary/Indirect Policy Action
A
Tax/Subsidize
10
Q
Nonmonetary/Indirect Policy Action
A
Inform/Implore
11
Q
Absolute Poverty
A
intends to measure poverty by assessing an individuals ability to afford a common basket of goods. It is intended to reflect the level to which an individuals basic needs are met
12
Q
Relative Poverty
A
50% or less of the median income in region or area.
- often used in research due to the fact that when median income shifts, relative poverty does as well.
13
Q
Why do we care about poverty?
A
- It is associated with worse health, lower educational achievement, higher mortality, etc.
- It is easier to measure than these other related outcomes.
- It is a proxy for things we want to minimize.
14
Q
Utility (Measuring Social Welfare)
A
Utility is a theoretical concept rather than something that can be quantified and measured
- Public policy does not provide us with any directly measurable indicators of overall human well-being.
- We cannot directly compare utility across individuals, our goal is to maximize social welfare without the capacity to actually measure social welfare
15
Q
Social Welfare Functions (Measuring Social Welfare)
A
- convert utilities of all individuals in a society into an index of social utility
- elucidates how society should allocate scarce resources to maximum social well-being
16
Q
Utilitarian Social Welfare Function
A
Produces the greatest good for the greatest number (sum). However, also provides weak protection for fundamental rights because it does not guarantee any minimal allocation to individuals
17
Q
Rawlsian Social Welfare Function
A
greatest benefit of least advantaged.
However, proposes extreme distribution regardless if the overall size of the pie shrinks.
18
Q
Multiplicative Social Welfare Function
A
Avoids allocations with very low levels of utility to any individuals.
However, still encourages some redistribution, which may diminish overall size of pie.
19
Q
Indicators
A
Tools to quantify and evaluate outcomes
- Should be easily measurable and highly correlated with underlying variable of interest
20
Q
Indexes
A
Combination of indicators into one single measure (ex: Human Development Index which combines literacy, GDP per capita ect.)
21
Q
Decreasing Marginal Utility
A
- When each additional unit of a good increases utility less than the previous one
- An additional dollar in income increases the life satisfaction of low- income earners more than that of high-income earners.
22
Q
Efficiency
A
the degree to which resources are used to generate the most productive outcome
- time is also a resource.
Ex) A hotel vs. a warehouse on a scenic beachfront
23
Q
Pareto-Efficient
A
when it is not possible to make any individual better off without making another individual worse-off
24
Q
Pareto-Inefficient
A
when it is possible to make one or more persons better off without making anyone worse off
Ex) One person with 2 left shoes and one person with 2 right shoes (they could trade and both be better off)
25
Deadweight Loss
A measure of inefficiency. Occurs when the loss of welfare imposed on one party exceeds the gain in welfare afforded to another party.
Ex) A thief takes $20 vs a thief takes $20 and also throws away the wallet
26
Minimum Wage: Deadweight Loss?
- The claim is that inefficiency arises because there are some workers who are not hired for $15/hr but would have been hired, if the minimum wage were lower. Those who would have been hired profitably at a lower wage represent deadweight loss.
- a minimum wage might create deadweight loss due to the fact that a higher wage encourages more individuals to want to "supply" their labor, but less firms to want to "buy" that labor due to an increased marginal cost of hiring more laborers. Effectively, this could cause a surplus of labor in the market and structural unemployment. These actions create a potential for deadweight loss by causing the potential loss of profits for firms to exceed the gain in wages for employees, therefore creating inefficiency.
27
Equity
measure of a policy's fairness
28
Uniformity
An equal division of resources and responsibilities
29
Horizontal Equity
the degree to which similar persons and situations are treated equally
30
Vertical Equity
is a measure of the degree to which rich and poor are treated differently (receive more benefits or pay more taxes)
31
Intergenerational Equity
refers to fairness in the way that policies treat different generations
- future taxpayers; social security paid by current taxpayers to finance current retirees (demographic challenges)
32
Market Economy
an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services
33
Market
a group of buyers and sellers of a particular good or service
34
Market Prices
reflect both the value of a product to consumers and the cost of the resources used to produce it
35
Competitive Markets
include many buyers and many
sellers/producers, such that no individual buyer or seller can affect
the market price of a good or service
36
Model
simplified illustration of how systems
operate used to gain greater insight into how the world works.
- Models are designed to cut through staggeringly complex relationships in order to focus on the most important factors at work
37
Law of Supply and Demand (2 core assumptions)
1) as the market price of a good or service falls, consumers will demand
more of it
2) when the price of a good or service rises, firms will supply more of it to
the market
- they will intersect at the only point where the supply produced by firms is equal to the quantity demanded by consumers
38
Willingness to Pay (WTP)
is the maximum amount the buyer will pay for that good
- somewhat indicates how much the buyer values the good
- The price of a good must be lower than (or equal) to a buyers WTP for them to purchase the good.
39
Consumer Surplus (CS)
the amount a buyer is willing to pay minus the amount the buyer actually pays.
- CS= WTP-P
- the difference between what you paid and what you were willing and able to pay
- area below demand curve and above the equilibrium price
40
Cost (Willingness to Sell)
the value of everything a seller must give up to produce a good (including value of the seller’s time)
- A seller will produce and sell the good/service only if the price exceeds their cost (hence, cost is a measure of willingness to sell )
41
Producer Surplus
the amount a seller is paid for a good minus the sellers cost.
- PS= P-cost
- Total PS = the area above the supply curve and below the demand curve
42
Social Surplus (Total Surplus)
= the sum of consumer surplus and producer surplus
43
A market (distribution of goods/services) is efficient if it...
maximies total social surplus
44
The best possible market outcome is achieved when:
- there is a free market, where firms compete on price and quality for every consumer dollar
- information in the market is fully transparent
- costs are fully internalized
- key assumption: buyers and sellers are perfectly informed
45
Asymmetry of Information
- one party to a transaction has more information than the other
- when information gap is significant enough, it can hinder the way markets operate, or even cause them to fail entirely
46
Opportunity Cost
the notion that the true cost of an activity is what we must give up in order to do it (e.g., time spent doing something else)
- i n a world of scarce resources, everything we do or buy requires us
to forgo doing or buying something else
- when it comes to non-market activities, such as being stuck in
traffic, the OC represents the value of whatever else you may have done with that time: making money at work, spending time with friends, etc.
- means assigning a price-tag to every activity
47
all markets bring together...
utility-maximizing consumers with profit-maximizing firms
48
market transactions
need not involve money. money is merely a mechanism for making transactions easier
- market transactions are voluntary. the key is that both the buyer and seller feel as though they are made better off by the deal/trade.
49
Regulating Market
dulls the mechanism by which
markets “heal” themselves
– unexpected disruptions can throw markets into temporary disequilibrium. immediate changes in price will change behavior, and fix the problem
* Ex) Gas price shock (imagine gas prices go up):
- the government could offer a subsidy to offset the increase in price, but this would just increase demand, making the problem worse
- the government could regulate the retail price by setting a price ceiling, but, this would just cause demand to exceed supply, which would lead to a shortage
50
Market Outcomes
are amoral. may or may not lead to outcomes that are socially desirable
51
Market Failure
situation in which market transactions do not lead to a socially efficient allocation of resources
- market participants are not able to make potentially mutually beneficial trades
- when property rights are vague, transaction costs are excessively high, or private transactions impose large negative externalities on 3rd parties (so what is good for market participants is not necessarily good for everyone else)
52
Role of Government (5 things)
1. Create and Enforce Property Rights
2. Lower Transaction Costs
3. Promote Competition
4. Ameliorate Externalities
5. Provide Public Goods
53
Property Right
the ownership or control of a parcel of property, an asset, or even an idea or artistic creation (think patents)
- in the absence of property rights, we would not be able to own anything
- government is also responsible for defending property rights (legal system)
54
How does the government lower transaction costs?
facilitating markets by providing information, infrastructure, institutions, and other support that makes private market transactions less costly
- government activities that facilitate private commerce information: regulation and certification
- Ex) stable currencies, online platform to compare healthcare providers
55
How does the government promote competition?
Enforce antitrust regulations to ensure that markets are competitive and to prevent firms from colluding
56
Negative externalities
arise when individuals or firms engage in an activity that imposes a cost on a party or parties not involved in the transaction
57
Positive externalities
arise when market participants do not take into account the positive benefits that their private behavior generates for a third party
58
Price discrimination
different prices for different costumers, depending on their willingness to pay
59
Private marginal cost
cost born by producer of producing one additional unit
60
Social marginal cost
cost borne by society to produce one additional unit
61
Coase theorem
parties affected by an externality will reach a private agreement to produce an efficient outcome if
1) property rights are clearly defined, exclusive, enforceable, transferable
2) transaction costs are low
62
Regulation
limit or prohibit behavior that has an adverse effect on third parties
63
Pigovian tax (or subsidy)
assess a tax on the offending activity that is equal to the difference between its private marginal cost and its social marginal cost
- In the case where an externality results from consumption, a similar tax can be levied on consumers (e.g., cigarettes); subsidies have the opposite effect, they encourage private activities with positive social spillovers by making the activities cheaper
64
Cap and Trade
regulatory body sets a cap for the total emissions of a certain pollutant, then distributes emissions permits, or allowances, up to a cumulative level. the permits are auctioned, resulting in the same efficiency as any other market.
- The pollution externality is internalized, meaning that emitting becomes a cost of doing business; firms must buy the right to pollute. Thus, profit-maximizing firms have an incentive not only to reduce emissions, but to do so as cheaply as possible
65
Value
a strongly held belief rooted in faith, life experience, or ideology
66
Fact
an objective reality or truth, generally informed by observations, measurement, or calculation
67
Theory
is a general principle supported by data or analytics; a theory can be supported, proved, or disproved by subsequent inquiry
68
Positive Analysis
A statement of a fact, finding, or theory that is devoid of judgement
69
Normative analysis
Gives explicit judgement about what should be done
70
Monopoly
a firm that is the sole seller of a product without close substitutes
71
Key difference between a monopoly and perfect competition
monopoly firms have market power (ability to influence the market price of a product they sell). competitive firms have no market power
72
Why do monopolies arise? (3 sources)
Barriers to entry: other firms cannot enter the market
3 Barriers to Entry:
1) Single firm owns a key resource (ex: owning most of the worlds diamond mines)
2): the government gives a single firm the exclusive right to produce a good (ex: patents, copyright laws)
3) economies of scale: single firm can produce the entire market at a lower cost than several firms
73
3 reasons why a monopoly is not a guaranteed money machine
1) monopolists cannot charge any price it wants and it will reap unseemly profits by continually increasing price
2) monopolists are sensitive to consumer demand
3) monopolists could operate at a loss
- must get the pricing/output right
74
Profit maximization
monopoly firms will not set the price arbitrarily high, the profit maximizing price still corresponds to the point where MR=MC
MR= additional revenue from selling one more unit q at price p
monopolists market power allow them to achieve above-normal profits
75
Cartel
producers explicitly agree to cooperate in setting prices and output levels
- if enough producers adhere to the cartel's agreements, and market demand is inelastic enough, the cartel may drive prices well above competitive levels
- barriers to entry: limit competition
-small number of large firms (except professional associations, avg. # in DOJ cases for cartels = 7.25)
76
Elasticity
a measure of the degree to which supply or demand change in response to a change in price.
- more elastic = more responsive to a change in price (oranges vs. cigarettes)
- when supply or demand is relatively invariant to price, it is described as "inelastic"
- firms can adapt their behavior to changes in prices more in the long run than the short run
77
Public goods
enhance overall social welfare, but will not necessarily be provided by the market
1) non-rivalrous (do not get used up)
2) non-exclusive (difficult to exclude individuals)
- government can provide public goods, and then mandate contributions in the form of taxation
78
4 types of market failures
1) natural monopolies: buyer/seller has too much power over price
2) externalities: actions of the consumer/producer help or harms a third party
3) public goods: a good may not be profitable for a company to produce even though society profits from its existence
4) information asymmetries: consumer unable to make informed choice because of the complexity
of the decision
79
5 methods of preventing market failure
1) enforcing property rights
2) lowering transaction costs (information and regulation)
3) promoting competition
4) ameliorating externalities
5) public goods provision
80
private good
excludable/rival
81
public good
nonrival/nonexcludable
82
club good
nonrival/exludable
83
common resource
rival/nonexcludable
84
"pure" public goods
share 2 characteristics:
1) nonrivalrous: cost of another person consuming the good is 0
2) nonexludable: very expensive to prevent others from consuming the good
- few goods are purely public or private.
- some goods are non rivalrous in consumption, but exclusion is possible (ex: fireworks. like public goods when its uncrowded, but as more people come consumption becomes rival)
85
Why does the market allocate public goods inefficiently?
for private goods:
-rivalrous (if consumed, cannot be consumed by another)
-excludable (consumer has complete control over the good)
for public goods:
-nonrivalrous (all consumers recieve MB from an additional unit of the good at zero MSC of consumption and positive MC of production)
- nonexcludable: person cannot maintain exclusive rights over the good; price does not reveal marginal benefits; individuals have no incentive to reveal their WTP because they cannot be excluded
86
How do we (consumers) value public goods?
- Everyone consumes same quantity of public good
- Consumers acting in their own self-interest have no incentive to contribute voluntarily to the production of public goods
- The economic incentive is missing: people can enjoy the benefits of public goods whether they pay for them or not, so the rational response is being unwilling to pay: If I can get you to pay for the public good, I can use my income for other purposes and still enjoy the public good
87
Free rider problem
If people cannot be excluded, they have little incentive to pay for the good or service
- market does not work efficiently. free-riders make it difficult for private providers to provide the
optimal amount of a public good
88
tragedy of the commons
overuse of a rival resource (ex: ocean fishing)
- consumer utility diminished by crowding or congestion (congestible public goods: pricing in national parks)
89
2 types of policy responses to public good problems
1) government provision
2) government funding but private provision (leverage the non-profit and for-profit sectors to achieve provision of the public good)
90
Public Provision vs. Public Production
Who should produce each good ?
- quality and costs: public services might offer more for the dollar, firms might exploit contracts
- public provision does not imply public production.
-dissatisfaction problem: individuals don't get to chose the quantity of a public good they buy, it is a collective purchase
- "vote with your feet": local land/housing prices reflect consumer preferences. an efficient mix of public goods is produced (almost like a private market)
91
moral hazard
when individuals or firms that are protected against some kind of loss act with less caution than they would have otherwise, thereby making a bad outcome more likely
- bail out financial actors, hurricane insurance
92
paternalism
improve social welfare by preventing individuals from engaging in harmful behavior
ex) road signs
93
redistribution
addresses inequitable allocation of resources
- Any efficient outcome follows from some initial endowment of resources, which may be highly unequal
- Any government intervention or redistribution will come with some efficiency cost, but might improve social welfare overall
94
fiscal place
is a unique geographic space that sits at the intersection of multiple overlapping governments with at least some power to tax or spend.
95
fiscal obligations
1) to residents
2) to other governments
3) to creditors
96
fiscal powers
what a fiscal jurisdiction can and cannot do
- legal, procedural, and administrative constraints
97
fiscal centralization
the fraction of fiscal activity that takes place at the higher level of government.
98
administrative burdens
challenges of acessing public benefits. can undermine policy goals, reinforce patterns of inequality, and weaken the policy.
- by accident vs. by design
- peoples experience of government. shift attention to the individuals experiences, and beyond the perspective of state actors or institutions
99
administrative burdens are rooted in
laws, organizational rules, and everyday implementation practices
- nonparticipation may reflect a utility maximizing decision
100
the gap between..... is filled with administrative burdens
people’s needs and the policies that are supposed to provide for them
101
learning costs
Applicants encounter learning costs when they are unaware of what benefit programs exist, how to apply, and how to use benefits
102
psychological costs
The stigma and stress of application processes, may also discourage uptake
103
compliance costs
Burdens of following program rules, providing documents for application and recertification processes, and responding to bureaucrats’ discretionary demands
- can deter program participation
104
redemption costs
Service delivery where beneficiaries must understand which goods or services are
eligible and find a third-party agent who will redeem the benefit
105
policy alternative
an option, solution, strategy, intervention to solve, mitigate or improve a public problem
106
Policy Solutions
1) Market Mechanisms: freeing markets (deregulate/legalize/privatize), facilitate markets (property rights/create new marketable goods), simulating markets (auctions)
2) Incentives: supply side taxes/subsidies, demand side taxes/subsidies
3) Rules: frameworks (civil laws), regulations (price and quantity regulation, disclosure/labeling)
4) Non-market mechanisms: direct supply/contracting out
5) Insurance and cushions: mandatory/subsidized insurance, stockpiling/traditional assistance/buy outs
- adverse selection: a market process in which buyers or sellers of a product or service are able to use their private knowledge of the risk factors involved in the transaction to maximize their outcomes, at the expense of the other parties to the transaction
107
Bardach "do nothing" alternative
- Bardach stresses the fact that this language doesn’t actually mean that nothing happens
– Bardach prefers to call this option “let present trends continue undisturbed”
– Illustrates the point that “natural change” may affect the underlying problem, in the absence of additional (policy) intervention
* Importance of evaluating the “do nothing” alternative against other finalists in a policy brief
108
Criteria
goals, values we want to achieve/realize, standards for evaluating results of policy actions
- standards for evaluating the results of action
- evaluative criteria are applied to the projected outcomes/impacts of policy alternatives
109
Purpose of criteria
several policy alternatives may generate the outcome we want, but criteria help us to assess:
- the magnitude of desired outcome produced by each alternative
- how likely each alternative is to produce desired outcome (feasibility)
- how well (cost) each alternative produces desired outcome
- identify criteria, develop a metric, measure impact of each alternative on each criterion, discuss tradeoffs
110
alternatives
courses of action
(whereas criteria are standards for evaluating the results of action)
111
principal objective
what we are aiming to maximize or minimize
ex) too many families are unhoused in NC
- principal objective= to minimize the # of unhoused families in NC
- criteria should target principal objective
112
meta-criteria (what makes a "good" criterion)
are the criteria:
- comprehensive (collectively exhaustive)
- independent (mutually exclusive)
-concise
113
common (broad) criteria
effectiveness (magnitude), efficiency (CBA or CEA), equity (equality of outcomes), political feasibility or acceptability (political climate), ease of implementation/implementation robustness (if implementation goes awry, how likely is a satisfactory outcome) , unintended/adverse consequences (moral hazard/adverse selection)
114
how do you measure criteria
figure out metric that will be used to measure each criterion
115
CBA
process by which benefits of a project are tallied up and compared to its costs
- any project for which the total benefits exceed the total costs will make us better off, provided that we are comfortable with the distribution of those costs/benefits.
116
2 unique challenges in public policy decision making
- Dimension (large group, overall society)
– No objective tool for measuring utility gains and losses directly
117
how to measure costs/benefits
- gains and losses are converted into monetary values so that we can more easily compare “apples to apples”
– admittedly imperfect process: means attaching dollar values to things that we might consider
“priceless” (but, without such calculations, we are left with no objective criteria for making policy decisions in a world that forces trade-offs)
118
6 steps of CBA
1) define scope of policy alternative (how far into the future do we look when defining costs and benefits?)
2) Identify all negative and positive effects of the policy alternative
3) Estimate the monetary costs and benefits of the policy alternative
4) take account of opportunity costs
5) calculate NPV (uses incorporated discount rate to calculate NPV today of costs and benefits realized in the future)
6) Present results using several scenarios or perform sensitivity analysis
119
Opportunity Cost (CBA version)
CBA always values an input or output using its opportunity cost, since that is the best reflection of what an individual or society must give up as the result of some course of action
120
present value determination
- Discounts a future value (FV) into its present value (PV) by accounting for the opportunity cost of money. The opportunity cost is its highest valued alternative use, which is the rate of return (r) on investment.
-Explains why money loaned in the present must be paid back in the future with interest
- Further explains why the present value of money received in the future is discounted
121
social discount rate
- Used to discount future benefits and costs back to present values
- A dollar today is worth more than a dollar next year
– If we consume now, we give up resources (later) – that is, there is an opportunity cost
- costs include both out of pocket AND opportunity
costs in CBA
122
controversy of the social discount rate
The decision of which rate to use is a political one
– What factors should a social discount rate reflect?
- Opportunity cost of private capital (after tax), given taxpayer money funds public project
- Interest rate to borrow money (bonds)
– Influences how intergenerational equity is weighted
- Low rates encourage projects with long-term benefits; investing in the
future
- Incorporating inflation and how to incorporate it can affect whether an alternative is selected
- Any approach estimating aggregate net benefits uses distributional weights.
123
sensitivity analysis
1. Consider several assumptions you have made on the way to your results and conclusion in your policy brief
2. Ask yourself: “How big a mistake can I afford in this assumption before this analysis (and associated conclusion) is in really big trouble?”
3. Conduct analyses that illustrate the degree of confidence you have in your conclusions – i.e., when would your conclusions change (for what values of which parameter?)
124
CEA
Cost-effectiveness analysis
– Ranks policies based on their costs for achieving some defined
objective
– Does not evaluate the worthiness of a project based on its total
benefits relative to costs
– Evaluates the efficiency of various options for achieving a goal
CE ratio = cost/ benefit.
- recommend LOWEST VALUE
125
how do you fill the cells of a matrix? (2 terms)
1) forecasting: educated guessing based on expert judgement and current research evidence
2) evaluation of pilot programs or previous programs in another area.
- use those findings to predict effects of your current policy alternative applied to a new area
- combinations of the above
126
what can go inside the cells of a matrix?
1) number
2) range of numbers
3) verbal descriptors (high, likely)
4) sign (+,-)
5) pictures
127
tradeoffs: what happens if no alternative dominates
- Involve projected outcomes
– Think and speak of tradeoffs across projected outcomes, NOT across alternatives
– Must convert alternatives into outcomes before a meaningful tradeoffs can be discussed
* CB and CE analyses can be helpful in discussing tradeoffs
* Should allow you to focus and deepen your conclusion to the most
promising alternative(s)
* Based on these tradeoffs, make a recommendation
128
policy implementation
Deals with how an administrative agency interprets a policy and puts it into effect
– Policies are rarely self-interpreting
- "Whatever is done to carry a law into effect, to apply it to the target population, and to achieve its goals"
129
examples of unclear legislative language
* “maximum feasible participation”
* “equality of educational opportunity”
* “special needs of educationally deprived students”
* “public interest”
130
clearance points
The number of individual decision points that must be agreed to before any policy intentions can be put into action
131
potential problems with implementing organizations
- Disunity
* Standard Operating Procedures (SOPs)
* Communication (selective distortion)
* Time
* Must plan for implementation with limited information
132
types of costs/benefits
1) economic costs and benefits: direct pecuniary loss or gain
2) noneconomic costs and benefits: intangible gain or loss (harder to quantify)
133
shadow pricing
assigning opportunity costs to resources with no obvious market price
134
revealed preferences
an economic theory regarding an individual's consumption patterns, which asserts that the best way to measure consumer preferences is to observe their purchasing behavior
