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managerial economics

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Increasingly, employees are being allowed to choose benefit packages from a menu of items. For instance, workers may be given a package of benefits that includes basic and optional items. Basics might include modest medical coverage, life insurance equal to a year's salary, vacation time based on length of service, and some retirement pay. But then employees can use credits to choose among such additional benefits as full medical coverage, dental and eye care, more vacation time, additional disability income, and higher company payments to the retirement fund. Using the theory of consumer behavior, how do you think flexible benefit packages would affect an employee's preference between higher wages and more benefits?

  • managerial economics -

    Younger, single, and lower paid employees will probably opt for higher wages. That is also true of married people whose spouses have good health insurance coverage.

    People who are responsible for their spouse and children's medical needs, will obviously opt for higher medical coverage.

    Middle-aged people are also looking toward retirement, so will often opt for higher retirement benefits.

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