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Tag: Buly Cardak

Department of Economics and Finance, LBS, Choice Modelling Workshop a major success

20160715_0951331-Tony McGrew

La Trobe Business School’s Department of Economics and Finance hosted a well-attended and highly successful Choice Modelling Workshop on 15 July 2016, at La Trobe’s City Campus. The workshop brought together international and Australian researchers on choice modelling and was organised by LBS academics A/Professor Buly Cardak and Dr Peter Sivey (RMIT). Presenters came from Monash University, University of Melbourne, UniSA, La Trobe University and the University of Kent, with most Melbourne and some interstate universities represented by academic staff and PhD candidates. It was pleasing and exciting to see both Marketing and Economics researchers presenting in and attending the same forum.

Choice modelling is a specialisation in empirical or applied research that sits between the use of survey data and the use of experiments. It involves researchers providing variation in hypothetical survey questions in order to elicit the preferences of survey respondents. There are many researchers in Australia using these methods in environmental, health and transport economics and in marketing.

Presenters and guests were welcomed by Head of La Trobe’s ASSC College, Professor Tony McGrew. The day involved a diverse range of research presentations, including a paper by Professor Tony Scott (University of Melbourne) that investigated how much time doctors and specialists want to spend working in public hospitals; a paper by Professor Harmen Oppewal (Monash University) that studied how the marketing of tourist destinations to time constrained tourists; a paper by Professor Iain Fraser (University of Kent at Canterbury and LBS) that used eye tracking to test what parts of packaging respondents were looking at when making food choices; and a paper by Professor John Rose (University of South Australia) that investigated people’s car purchasing choices under budget constraints, with interesting findings about choices after people are forced to make budgeting allowances when planning a car purchase.

These are details of only some of the presentations, information about all seven presentations and in some cases, slides and papers are available, here.

Guests and presenters left the workshop excited and inspired about the research presented and were hopeful that the Choice Modelling Workshop might become an annual event.

LBS Associate Professor Buly Cardak receives prestigious NCSEHE research grant

Buly Cardak La Trobe Business School
LBS Associate Professor Buly Cardak has been awarded a research grant by the National Centre for Student Equity in Higher Education. The NCSEHE grant funding of $39,000 is for the project “Factors influencing participation and migration of regional higher education students”, and is a collaboration with Mr Matt Brett, Senior Manager – Higher Education Policy at La Trobe University and Dr Mark Bowden, Senior Lecturer at Swinburne University of Technology.

The National Centre for Student Equity in Higher Education

The NCSEHE’s purpose is to inform public policy design and implementation, and institutional practice, in order to improve higher education participation and success for marginalised and disadvantaged people. The centre strives to close the gap between Equity Policy, Research & Practice.

Project Abstract

Students of regional origin in Australia continue to experience inferior educational outcomes to the rest of the population and are under-represented in higher education. Associate Professor Buly Cardak’s project (in collaboration with Mr Matt Brett and Dr Mark Bowden) will improve our understanding of the factors affecting regional student university participation and completion. The project will focus on two issues, repeatedly raised as key factors driving the decisions of regional students: (i) higher education costs; and (ii) the need relocate to pursue some programs of study. The project will be data driven and will draw on the Longitudinal Survey of Australian Youth and higher education administrative data collection in order to undertake the analysis.

Is university right for everyone?

Buly Cardak La Trobe Business School

Should young people aim for university graduation, or is it better to focus on other things in life? LBS Associate Professor Buly Cardak was featured on Radio National in a series of interviews to talk about how the disparity between well off students and disadvantaged students is reflected in graduation rates.

To listen to the latest interview, please refer to the ABC Radio National website.

Bellamy’s baby formula. What would you do?

Buly Cardak La Trobe Business School
By Buly Cardak

Imagine you run a business where your product is so hot it doesn’t even touch the store shelves. It flies out the door faster than you can ship it to the retailer. What a great problem to have. This is the problem facing Bellamy’s Organic, Tasmanian based maker of Bellamy’s Organic Infant Formula. Their infant formula is in such great demand in Australia and overseas that they cannot keep up. How does a business respond to these circumstances?

Bellamy’s is watching its product fly out the door. Lots of this product is finding its way overseas to China. Chances are it’s being onsold at a large markup, with profit going to middlepersons, rather than Bellamy’s and its shareholders. This is a classic example of excess demand for the product. There are clearly people who are willing to pay more than the current supermarket price for the product. In introductory economics courses taught around the world, the concepts of demand and supply are used to illustrate who benefits from a transaction. There is consumer surplus and producer surplus. Somewhere in the recent past, Bellamy’s Organic Infant Formula became so hot that the demand for the product increased dramatically. Bellamy’s thinks there’s a lot of consumer surplus in this product at current prices. Their response is to increase the market price. They are punting that even at a new higher price, everything they’ve got to sell is going to continue to fly off the shelves. In raising price they are hoping to turn some consumer surplus into producer surplus, increasing their own profits.

It’s a fine line they have to tread. Infant formula would be a sensitive product to try to increase prices and profits on, it’s easy to criticise. But it’s a far cry from profiteering, where for example, suppliers raise the price of petrol or bottled water after a natural disaster like a hurricane or flood. Under Australia’s Competition and Consumer Act 2010, businesses are free to set prices for their products as they choose, as long as they do not collude and fix prices. They cannot impose minimum prices on resellers, nor can they sell at below cost in order to harm competitors, known as predatory pricing. This is where Coles comes in. Once the baby formula is delivered to them, they are free to choose the price they sell it at, just like Bellamy’s determines the price they sell it to Coles for. It is not public what the profit margins on this product are and I am not aware of how the supermarket price has evolved over the past year. But just like Bellamy’s, Coles would have an incentive to raise prices too. We can think of at least two reasons they might not have raised price. First, competition between supermarkets might be so strong that if they do raise price, they might lose a lot of business. Given the shortages, I suspect this is not the case. The second is that they were afraid of a public relations disaster. Raising the price of baby formula is not a good look, it’s trying to turn a bigger profit off consumers who cannot fend for themselves, babies.

According to a story in The Age (“Coles strategy to shame suppliers”, 19 December 2015), Coles has turned the tables on Bellamy’s, making it very clear that they are simply passing on price rises from the manufacturer. In doing so, they are putting pressure back on the producer and have turned consumer advocate. A clever public relations move given they were penalised $10 million by the ACCC for their dealings with suppliers in the past.

What about the babies? In a market based economy stuff is allocated by price, to those that can pay. Infant formula is no different. Higher prices mean people will look for a substitute. Whether it’s the local or international consumers who need to substitute, only time will tell. The massive demand for the trusted Australian product will entice more producers into the market. On 30 November 2015, Bellamy’s announced a strategic manufacturing arrangement with Fonterra Australia to ramp up production, showing that in this case market forces do work, though production is not a tap that can simply be turned on when demand increases. These things will take time. In the meantime, desperate parents will struggle to get their hands on their favoured organic infant formula and people will call for restrictions on per customer sales and on overseas trade of the product. The good news is babies grow up and won’t be drinking formula for ever, their parents’ woes will be a distant memory, eventually.

LBS Associate Professor Cardak quoted in The Age on wealth and access to higher education

Buly Cardak La Trobe Business School
On 18 January 2016, La Trobe Business School economics researcher Dr Buly Cardak was quoted in The Age article ‘University offers benefit wealthy and realistic students’.

In the article, A/Professor Cardak comments on his recent research findings showing that wealthier school leavers with a realistic worldview and ongoing forms of support access higher education at greater rates compared with students from disadvantaged backgrounds.

Dr Cardak is a specialist in the economics of education, and has been researching factors influencing students’ university studies since early 2006. Read the full article on The Age’s website.

For more information on Dr Cardak’s research, see his website.

Buly Cardak’s research reveals connections between student dropout rate and financial hardship

Buly Cardak La Trobe Business School

La Trobe Business School academic Buly Cardak recently came under the spotlight with his research on dropout rates among university students, with his research receiving significant media coverage. Specialising in the economics of education, he has been researching factors influencing students’ studies since early 2006. In his recent study, Associate Professor Cardak and his collaborator Joe Vecci studied the connection between the financial hardship of university students and the likelihood that these students would graduate or dropout at some later stage in their studies.

The data show that one in three students from financially disadvantaged backgrounds drop out from university studies. Further to this, students from financially disadvantaged backgrounds are up to 15% more likely to dropout than students from financially secure backgrounds. It is believed these effects operate through costs of living, e.g. paying for food, books, or transport, rather the tuition fees which can be deferred through HECS.

Associate Professor Cardak notes that these results are important because not only do they show that students experiencing financial hardship are more likely to drop out, but it was found that after three years of study, the likelihood of dropping out among financially disadvantaged students increases rather than falls as it does for other students. Disadvantaged students that don’t finish their degree in the standard allotted time are likely to be cut off from government income support. Facing this financial challenge, many students have no choice but to drop out. Not only is this detrimental to disadvantaged students, but it is also costly to society. After financially supporting students for several years, to have them drop out of university altogether, presents the economy with a costly loss of potentially skilled graduates.

Another important finding was how the Youth Allowance benefited students. It was found that students who are independent Youth Allowance recipients were less likely to drop out. However, results pointed to these students taking a longer time to graduate. It is suspected that this is related to students who have taken time off from study in order to work full time and earn sufficient income to demonstrate their financial independence and qualify for independent Youth Allowance. It seems that taking this time off from study has a longer term detrimental effect with students in this situation actually taking longer to graduate.

Associate Professor Buly Cardak and Joe Vecci, who have been conducting this study together, are hoping to conduct further analysis over the coming years on this issue, and to consider ways to improve the circumstances for financially disadvantaged students.

To read the full article in which this research has been published, see: Cardak, B.A. and J. Vecci, “Graduates, Dropouts and Slow Finishers: The Effects of Socioeconomic Status on University Educational Outcomes”, Oxford Bulletin Of Economics and Statistics.


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