<html><body><div style="color:#000; background-color:#fff; font-family:garamond, new york, times, serif;font-size:10pt"><div style="font-family: garamond, 'new york', times, serif; ">Understanding how we can assess how much people might be willing to pay, and how they can be encouraged to take the leap and try out an improved stove that saves them money, might require some help from a variety of disciplines (thanks for those superbly detailed reports Cecil!).</div><div style="font-family: garamond, 'new york', times, serif; "><br></div><div style="font-family: garamond, 'new york', times, serif; ">I recently attended a presentation for Kirk Smith's IAP research group, by a UC Berkeley economist who conducted a study in Kampala using the Ugastove, on an investigation of alternative ways for people to buy stoves - so that typical adoption barriers (e.g. insufficient cash on hand to purchase, lack of trust in salesmen and/or the quality of unfamiliar
gadgets, and doubt in claims of potential fuel savings and payback time) might be addressed:</div><div style="font-family: garamond, 'new york', times, serif; "><br></div><div><div><span><font class="Apple-style-span" size="4"><i>"This sales offer is well-suited to selling improved stoves, especially for </i></font></span></div><div><i><font class="Apple-style-span" size="4">customers who purchase their fuel. Specifically, the first time payment</font></i></div><div><i><font class="Apple-style-span" size="4">can be set so customers pay it largely or entirely from fuel savings they </font></i></div><div><i><font class="Apple-style-span" size="4">have already experienced during the free trial. If there is not enough fuel </font></i></div><div><i><font class="Apple-style-span" size="4">savings, the consumer can just return the stove. This process repeats, so </font></i></div><div><i><font class="Apple-style-span"
size="4">subsequent time payments are also largely recent fuel savings, and if the </font></i></div><div><i><font class="Apple-style-span" size="4">stove breaks the consumer returns the stove and owes nothing. With this </font></i></div><div><i><font class="Apple-style-span" size="4">combination of a free trial and “rent-to-own,” the customer bears almost </font></i></div><div><i><font class="Apple-style-span" size="4">no risk the product will not work as advertised."</font></i></div></div><div style="font-family: garamond, 'new york', times, serif; "><br></div><div style="font-family: garamond, 'new york', times, serif; ">The results sound very encouraging, and his experience is helpful because it comes from a little outside the usual stove community - we don't all always hear about such methods of economic investigation and analysis. Here is some easy to digest press on the study:</div><div><a
href="http://www.ssireview.org/opinion/entry/improving_sales_offers_for_improved_stoves">http://www.ssireview.org/opinion/entry/improving_sales_offers_for_improved_stoves</a><br></div><div style="font-family: garamond, 'new york', times, serif; ">and here is the (draft) report itself:</div><div><a href="http://ehs.sph.berkeley.edu/krsmith/financial/levine11newsales.pdf">http://ehs.sph.berkeley.edu/krsmith/financial/levine11newsales.pdf</a><br></div><div style="font-family: garamond, 'new york', times, serif; "><br></div><div style="font-family: garamond, 'new york', times, serif; ">What kinds of communities would this work in, and where might it not? As always, you want to understand what features people value in a stove plus have a <u>general</u> idea of what they might pay, so that you can offer those stove models which are locally suitable.</div><div style="font-family: garamond, 'new york', times, serif; "><br></div><div style="font-family:
garamond, 'new york', times, serif; ">At the talk he provided additional discussion on associated concepts, such as why people don't always do what we think they logically should, and how we might determine (and perhaps adjust?) their willingness to pay (WTP). Lots of general behavioral economics lore and jargon came up that were sometimes new to me, and always relevant - endowment effect, present bias, cash-in-advance and liquidity constraints, transaction cost impacts, the intimidating sounding Becker-DeGroot-Marschak (BDM) method for determining WTP, loss or risk aversion, and social spillover. </div><div style="font-family: garamond, 'new york', times, serif; "><br></div><div style="font-family: garamond, 'new york', times, serif; "><font class="Apple-style-span">Charlie Sellers</font></div><div style="font-family: garamond, 'new york', times, serif; font-size: 10pt; "><br></div><div style="font-family: garamond, 'new york', times, serif;
font-size: 10pt; "><br></div><div style="font-family: garamond, 'new york', times, serif; font-size: 10pt; "><b style="font-family: sans-serif; line-height: 20px; ">Behavioral economics</b><span class="Apple-style-span" style="font-family: sans-serif; line-height: 20px; "> and its related area of study, </span><b style="font-family: sans-serif; line-height: 20px; ">behavioral finance</b><span class="Apple-style-span" style="font-family: sans-serif; line-height: 20px; ">, use social, </span><a href="http://en.wikipedia.org/wiki/Cognitive_bias" title="Cognitive bias" style="text-decoration: none; color: rgb(6, 69, 173); background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; font-family: sans-serif; line-height: 20px; ">cognitive</a><span class="Apple-style-span" style="font-family: sans-serif; line-height: 20px; "> and emotional factors in understanding the </span><a
href="http://en.wikipedia.org/wiki/Economic" title="Economic" class="mw-redirect" style="text-decoration: none; color: rgb(6, 69, 173); background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; font-family: sans-serif; line-height: 20px; ">economic</a><span class="Apple-style-span" style="font-family: sans-serif; line-height: 20px; "> </span><a href="http://en.wikipedia.org/wiki/Decision_making" title="Decision making" style="text-decoration: none; color: rgb(6, 69, 173); background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; font-family: sans-serif; line-height: 20px; ">decisions</a><span class="Apple-style-span" style="font-family: sans-serif; line-height: 20px; "> of individuals and institutions performing economic functions, including consumers, borrowers and investors, and their effects on </span><a
href="http://en.wikipedia.org/wiki/Market_price" title="Market price" style="text-decoration: none; color: rgb(6, 69, 173); background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; font-family: sans-serif; line-height: 20px; ">market prices</a><span class="Apple-style-span" style="font-family: sans-serif; line-height: 20px; ">, </span><a href="http://en.wikipedia.org/wiki/Profit_(economics)" title="Profit (economics)" style="text-decoration: none; color: rgb(6, 69, 173); background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; font-family: sans-serif; line-height: 20px; ">returns</a><span class="Apple-style-span" style="font-family: sans-serif; line-height: 20px; "> and the </span><a href="http://en.wikipedia.org/wiki/Allocation_of_resources" title="Allocation of resources" class="mw-redirect" style="text-decoration: none; color:
rgb(6, 69, 173); background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; font-family: sans-serif; line-height: 20px; ">resource allocation</a><span class="Apple-style-span" style="font-family: sans-serif; line-height: 20px; ">. </span><br></div><div style="font-family: garamond, 'new york', times, serif; font-size: 10pt; "><br></div><div style="font-family: garamond, 'new york', times, serif; font-size: 10pt; "><br></div><div style="font-family: garamond, 'new york', times, serif; font-size: 10pt; "><br></div> <div style="font-size: 10pt; font-family: garamond, 'new york', times, serif; "> <div style="font-size: 12pt; font-family: 'times new roman', 'new york', times, serif; "> <font size="2" face="Arial"> <hr size="1"> <b><span style="font-weight:bold;">From:</span></b> Marc Pare <mpare@gatech.edu><br> <b><span style="font-weight: bold;">To:</span></b> Discussion of biomass cooking
stoves <stoves@lists.bioenergylists.org> <br> <b><span style="font-weight: bold;">Sent:</span></b> Saturday, November 19, 2011 9:13 PM<br> <b><span style="font-weight: bold;">Subject:</span></b> Re: [Stoves] Stove costs<br> </font> <br>
<div id="yiv889501144"><div>To add to the idea about perceived value that Cecil and Crispin started --</div><div><br></div><div>One of the most eye-opening readings on the topic for me was the publication <a rel="nofollow" target="_blank" href="http://www.hedon.info/docs/GVEP_Markets_and_Cookstoves__.pdf ">"Cookstove and Markets: Experiences, Successes, and Opportunities"</a> published by GVEP International in 2009.</div>
<div><br></div><div>(Jan -- there is also some discussion in the paper regarding your original question about price, convenience, performance)</div><div><br></div><div>On pg 38, the authors present a figure comparing attributes of products marketed to the poor. It turns out that the problem is more nuanced than "the price is right". The decision-making steps presented in the paper are:</div>
<div><br></div><div>"Initial Perceived Value"</div><div>"Affordable with Disposable Income"</div><div>"Affordable with Microfinance"</div><div>"Magnitude of Change [to daily habits]"</div>
<div><br></div><div>Something like Coca-Cola has a high perceived value, is affordable with disposable income, and requires little change to daily habits.</div><div><br></div><div>It shouldn't come as much of a surprise that cook stoves in rural areas face barriers at each of those stages.</div>
<div>- low perceived value because of <i>gradual</i> negative impact to health</div><div>- generally not affordable with disposable income</div><div>- and often a big change to daily habits </div><div><br></div>Marc Paré<br>
B.S. Mechanical Engineering<br>Georgia Institute of Technology | Université de Technologie de Compiègne<br><br>my cv, etc. | http://notwandering.com<br>
<br><br><div class="yiv889501144gmail_quote">On Sun, Nov 20, 2011 at 11:04 AM, Anand Karve <span dir="ltr"><<a rel="nofollow" ymailto="mailto:adkarve@gmail.com" target="_blank" href="mailto:adkarve@gmail.com">adkarve@gmail.com</a>></span> wrote:<br><blockquote class="yiv889501144gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex;">
Dear Jan,<br>
I keep hearing about the people earning less than US$2 per day. In a<br>
lot of cases the income is shown to be low in statistics generated by<br>
the Government of that particular country. Even a landless labourer in<br>
a village in India would have some hens and a goat (or ducks and a<br>
pig), the income from which never enters the Government statistics.<br>
Another fact of life is that people's priorities differ from ours.<br>
Some of us feel that the poor should have a clean latrine and a clean<br>
kitchen, but the poor themselves often consider a cellphones in their<br>
pocket and a t.v. in the house to be more important. Also the rate of<br>
conversion of a dollar into the local currency is often manipulated by<br>
the Government. 2 Dollars in a poor country has a relatively high<br>
buying power in that country than in the US.<br>
Yours<br>
A.D.Karve<br>
<div class="yiv889501144im"><br>
On Sat, Nov 19, 2011 at 5:38 AM, Jan Bianchi <<a rel="nofollow" ymailto="mailto:janbianchi@comcast.net" target="_blank" href="mailto:janbianchi@comcast.net">janbianchi@comcast.net</a>> wrote:<br>
</div><div><div class="yiv889501144h5">> Do any of you know of a list that compares different clean burning cook<br>
> stoves not only by fuel type, efficiency and emissions, but also by price<br>
> and the presence or lack thereof of subsidy? I don’t see the latter<br>
> information on most websites that describe different stoves.<br>
><br>
><br>
><br>
> If there isn’t such a list, maybe we could work to put together one by each<br>
> of you sending a link that describes a stove and stating the price they are<br>
> currently being sold for in local communities, together with whether there<br>
> is a subsidy and if so the amount? I’d be happy to work with Erin to put<br>
> together such a list from your answers.<br>
><br>
><br>
><br>
> For people living on $2 a day or less, what for example would be considered<br>
> a low cost stove? Middling? High?<br>
><br>
</div></div><div class="yiv889501144im">> _______________________________________________<br>
> Stoves mailing list<br>
><br>
> to Send a Message to the list, use the email address<br>
> <a rel="nofollow" ymailto="mailto:stoves@lists.bioenergylists.org" target="_blank" href="mailto:stoves@lists.bioenergylists.org">stoves@lists.bioenergylists.org</a><br>
><br>
> to UNSUBSCRIBE or Change your List Settings use the web page<br>
> http://lists.bioenergylists.org/mailman/listinfo/stoves_lists.bioenergylists.org<br>
><br>
> for more Biomass Cooking Stoves, News and Information see our web site:<br>
> http://www.bioenergylists.org/<br>
><br>
><br>
><br>
<br>
<br>
<br>
--<br>
</div>***<br>
Dr. A.D. Karve<br>
Trustee & Founder President, Appropriate Rural Technology Institute (ARTI)<br>
<div class="yiv889501144HOEnZb"><div class="yiv889501144h5"><br>
_______________________________________________<br>
Stoves mailing list<br>
<br>
to Send a Message to the list, use the email address<br>
<a rel="nofollow" ymailto="mailto:stoves@lists.bioenergylists.org" target="_blank" href="mailto:stoves@lists.bioenergylists.org">stoves@lists.bioenergylists.org</a><br>
<br>
to UNSUBSCRIBE or Change your List Settings use the web page<br>
<a rel="nofollow" target="_blank" href="http://lists.bioenergylists.org/mailman/listinfo/stoves_lists.bioenergylists.org">http://lists.bioenergylists.org/mailman/listinfo/stoves_lists.bioenergylists.org</a><br>
<br>
for more Biomass Cooking Stoves, News and Information see our web site:<br>
<a rel="nofollow" target="_blank" href="http://www.bioenergylists.org/">http://www.bioenergylists.org/</a><br>
<br>
</div></div></blockquote></div><br>
</div><br>_______________________________________________<br>Stoves mailing list<br><br>to Send a Message to the list, use the email address<br><a ymailto="mailto:stoves@lists.bioenergylists.org" href="mailto:stoves@lists.bioenergylists.org">stoves@lists.bioenergylists.org</a><br><br>to UNSUBSCRIBE or Change your List Settings use the web page<br><a href="http://lists.bioenergylists.org/mailman/listinfo/stoves_lists.bioenergylists.org" target="_blank">http://lists.bioenergylists.org/mailman/listinfo/stoves_lists.bioenergylists.org</a><br><br>for more Biomass Cooking Stoves, News and Information see our web site:<br><a href="http://www.bioenergylists.org/" target="_blank">http://www.bioenergylists.org/</a><br><br><br><br> </div> </div> </div></body></html>