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A REFUTATION OF THE ‘COSTS OF PRODUCING QUALITY’ THEORY
PETER BOWBRICK
This refutation is one chapter of my book, The Economics of Quality, Grades and Brands, Routledge Revivals, 2014. A list of my other books and papers on quality can be found at the end of this paper. I should be happy to provide copies to researchers: contact me at [email protected].
INTRODUCTION In the literature on quality control, quality assurance, Total Quality Management etc. there is
often a discussion of what is called The Costs of Quality, or even The Economics of Quality
Assurance.1 The cost of quality approach is essentially one carried out by quality assurance
engineers using cost accounting data, rather than one that would be used by economists.
There has been a certain amount of criticism of the approach within the paradigm (e.g.
Plunkett and Dale, 1988, and Fox, 1989) partly a criticism of the method itself, and partly an
assertion that the results quoted were not realistic. In this chapter, however, a much more
fundamental criticism will be presented, from the point of view of an economist. The main
thrust of the argument will be that the writers on the subject have used a wide variety of
variables as axes to their graphs, more or less interchangeably. They have failed to define
what exactly is the variable they are using for their axes, or how they measure the variables.
In Figures 12.3 to 12.18, some 48 curves will be plotted, all showing the same cost to an
imaginary firm (Table 12.1), but defined according to the different variables used in the
literature (the numbers attached to the curves refer to the corresponding row in Table 12.1).
The curves are completely different in shape2. It follows that the arguments in the literature
about typical shapes for the curves are pointless: everybody is plotting different variables, so
of course different curves can be expected. It will be argued that this confusion implies a
lack of a theoretical basis for the costs of quality. This paper will also show that there is
1 See BS 4891 for definitions, Plunkett and Dale ( 1988) for a review and Fox (1989) for
some criticisms. I am indebted to Plunkett and Dale for assembling the many types of
diagram used and presenting them in a way which makes comparison easy, and I use their
paper as a source for many of the references cited. They are not however responsible for the
analysis and criticism that follows. 2 No attempt will be made here to quantify data from real firms or to find industry averages or
typical curves: this would be counter-productive, given the lack of any theoretical basis.
Garvins search of the literature concluded The data on quality costs . . . is largely
anecdotal, often accounts by companies wishing to publicize successful quality programs
(1988 p82). Interestingly, he also found that The concept of quality costs is not widespread
Peter Bowbrick, ‘From Economic Research to Policy in 32 Years’, Eurochoices (2012) EuroChoices 11(3) p 44.
Bowbrick, P., “The case against compulsory minimum standards”, Journal of Agricultural Economics. 28: 113-
117, May. 1977. Bowbrick, P., “The Economics of Grades”, Oxford Agrarian Studies. 11, 65-92. 1982.
Bowbrick, P., An Economic Appraisal of the EEC Fruit and Vegetable Grading System. Dublin. 1981. DOI: 10.13140/2.1.3424.9762 Bowbrick, P., A Refutation of Lancaster’s theory of Consumer Demand, PhD Thesis, Henley Management
College, 1994.
Bowbrick, P., “Quality theories in agricultural economics”, Presented at EAAE Seminar Agricultural
Marketing and Consumer Behaviour, 1996.
Bowbrick, P., “Limitations of non-behavioural approaches to the economics of quality” Conference of
International Association for Research on Economic Psychology and the Society for the Advancement of
Bowbrick, P., “The conceptual basis of Quality in marketing”
Bowbrick, P., “A critique of economic man theories of quality”
Bowbrick, P., The Economics of Quality, Grades and Brands, Routledge, London 1992.
http://www.bowbrick.org.uk/Publications.htm
Bowbrick, P., 1992. A refutation of (most) hedonic models, Oxford: s.n.
Bowbrick, P., 1992. A refutation of The Cost of Quality, Oxford: s.n.
Bowbrick, P., “Justifications for compulsory minimum standards” British Food Journal, 92 (2) 23-30, 1990.
Bowbrick, P., “Stars and Superstars”, American Economic Review. June. p459 vol 73 1983.
Bowbrick, P., “Pseudo-research in marketing - the case of the price:perceived quality relationship”, European
Journal of Marketing. 14(8) 466-70. 1980
Bowbrick, P., “Compulsory grading and the consumer”, Acta Horticulturae. 55. 1976.
Bowbrick, P., “A perverse price-quality relationship”, Irish Journal of Agricultural Economics and Rural
Sociology. 6 93-94. 1976.
Bowbrick, P., “Evaluating a grading system”, Irish Journal of Agricultural Economics and Rural Sociology. 7
117-126. 1979.
Bowbrick, P., “A new approach to the economics of grading”, Paper to Irish Agricultural Economics Society.
1974.
Griffiths, P., Codes of Practice, Ethics and the Law – the Case of Fairtrade Coffee. pending
Griffiths, P., 2015 Marketing by Controlling Social Discourse: the Fairtrade Case (In Press)
Griffiths, P., 2014. Fairtrade in Schools: teaching ethics or unlawful marketing to the defenceless?. Ethics and Education, DOI:, 9(3 DOI 10.1080/17449642.2014.978122), pp. 369-384.
Griffiths, P., 2011. Ethical Objections to Fairtrade. Journal of Business Ethics, pp. 357-373. http://www.griffithsspeaker.com/Fairtrade/why_fair_trade_isn.htm
Griffiths, P., 2013. Ethical Objections to Fairtrade. In: New Directions in Critical Marketing Studies. s.l.:SAGE.
Griffiths, P., 2013. Fairtrade: comment on Tedeschi and Carlson. Journal of International Development, p. DOI: 10.1002/jid.2965. http://www.griffithsspeaker.com/Fairtrade/why_fair_trade_isn.htm
Griffiths, P., 2010. Lack of rigour in defending Fairtrade: a reply to Alastair Smith. Economic Affairs, pp. 45-49. http://www.griffithsspeaker.com/Fairtrade/why_fair_trade_isn.htm
Griffiths, P., 2010. Rejoinder: False Statements, Misrepresentations and distortion in defending Fairtrade. http://www.griffithsspeaker.com/Fairtrade/Rejoinder%2026%20Jun%202010%20full.pdf
Griffiths, P., 2011. Rejoinder: False Statements, Misrepresentation and Distortion in Defending Fairtrade. Economic Affairs, pp. 103-4.
Griffiths, P., 2010. Refutation: Does Fair Trade deliver on its Core Value Proposition?. Available at: http://www.griffithsspeaker.com/Fairtrade/Arnould%20et%20al%20web.doc
ON MARKET MARGINS AND MARKETS Bowbrick, P., “Marketing Board inefficiency and farmers’ incomes”, Conference on African Marketing
Boards. African Studies Centre, Leiden, Netherlands. 1983.
Bowbrick, P. & Feeney, P., 1981. “The impact of cost-saving innovations with traditional margins”, Journal of
Agricultural Economics. May. 1981.
Bowbrick, P., “Price stabilization funds”, Agricultural Economics Society of Tanzania Conference. 1981.
Bowbrick, P. & Feeney, P., 1981. The impact of cost-saving innovations with traditional margins. Journal of
Bowbrick, P., “Market-margin investigations and price control of fruit and vegetables”, Irish Journal of
Agricultural Economics and Rural Sociology. 6 9-20. 1976. Bowbrick, P., “Commission sales or firm-price
sales - a conflict of interest”, Irish Journal of Agricultural Economics and Rural Sociology. 5 229-238. 1975.
Bowbrick, P., “Some limitations of market-margin analysis”, Irish Journal of Agricultural Economics and
Rural Sociology. 4(2) 23-28. 1974.
Bowbrick, P., “Retail mark-ups and distributive margins - a critical analysis of Professor Allen’s theory”, Irish
Journal of Agricultural Economics and Rural Sociology. 4(2) 1-23. 1973.
Bowbrick, P., “Price stabilization in a two-sector industry”, Acta Horticulturae. 40. 1972.
MISUSES OF PRICE AND OTHER STATISTICS See also discussions of the unreliability of statistics, doing economics when the data is not available and doing economics when the data are
wrong in The Art and Practice of the Economist. Major problems with market price data are also shown in the papers on market margins.
Bowbrick, P., 2015. Interpreting Statistics in an English Team Based Evaluation. In: P. Smeyers, D. Bridges, N.
Burbules & M. Griffiths, eds. International Handbook of Interpretation in Educational Research. s.l.:Springer,
pp. 1347-1381.http://link.springer.com/chapter/10.1007%2F978-94-017-9282-0_66
Bowbrick, P., “Are price reporting systems of any use?”, British Food Journal. 90(2) 65-69 March/April. 1988.
Bowbrick, P., 1985. On the total irrelevance of cost-of-production figures for subsistence agriculture.
Bowbrick, P., “Errors in horticultural cost-of-production surveys”, Irish Journal of Agricultural Economics and
Rural Sociology. 6 21-29. 1976.
Bowbrick, P., “A note on the prices of food sold to wage earners in Zambia”, Monthly Economic Bulletin.
THE ART AND PRACTICE OF THE ECONOMIST How economists work once they graduate – or how they should if they want to make an impact. Griffiths, P., 2003. The Economist's Tale: a consultant encounters hunger and the World Bank.. London and
New York: Zed Books.
Bowbrick, Peter, The Art and Practice of the Economist.
Morwenna Griffiths, Tony Cotton, Peter Bowbrick, “Educational researchers doing research on educational
policy: Heroes, puppets, partners, or…?” Paper presented to the British Educational Research Association
Annual Conference, Warwick 2006.
Mal Leicester, Roger Twelvetrees, Peter Bowbrick, “Philosophical Perspectives on Lifelong Learning – insights
from education, engineering and economics,” in David Aspin (Ed.) Philosophical Perspectives on Lifelong
Learning (Kluwer Press)
Griffiths, P., 2008. Working abroad with a degree of scepticism. Sunday Times, 8 June. http://www.griffithsspeaker.com/Other%20publications/Short%20articles.htm Bowbrick, P., “Maximizing consultancy income” Journal of Management Consulting. Spring 1995.
Bowbrick, P., The use of Counseling Skills in Consultancy, MA dissertation, Nottingham University, 1993
Bowbrick, P., n.d. Thesis Fodder – a new role for the Third World. Times Higher Education Supplement.
Bowbrick, P., “The use of voice recorders in agricultural economics research”, Journal of Agricultural
Economics. 26(2) 261-263. 1975.
ON FAMINES Griffiths, P., 2003. The Economist's Tale: a consultant encounters hunger and the World Bank.. London and
New York: Zed Books.
Bowbrick, P., “A refutation of Sen’s theory of famine”, Food Policy. 11(2) 105-124. 1986.
Bowbrick, P., “Rejoinder: an untenable hypothesis on the causes of famine”, Food Policy. 12(1) 5-9, February.
1987. See also George Allen “Famines: the Bowbrick-Sen dispute and some related issues,” Food Policy,
11(3) 259-263, 1986, Amartya Sen “Reply: famine and Mr Bowbrick”, Food Policy 12(1) 10-14, and Amartya
Sen “The causes of famine: a reply”, Food Policy 11(2) 125-132, 1986.
Bowbrick, P., A refutation of Professor Sen’s theory of famines. Institute of Agricultural Economics, Oxford. 1986 updated 2009. Bowbrick, P., “How Professor Sen’s theory can cause famines”, Agricultural Economics Society Conference. March. 1985. Bowbrick, P., “Why Professor Sen’s theory is wrong”, Development Studies Association Conference. September. 1985.
Bowbrick, P., “Five Famine Fallacies” in Julian Morris and Roger Bate (eds.) Fearing Food: risk, health and
environment, Butterworth Heineman, Oxford. ISBN 0-7506-4222-x, 1999
Bowbrick, P., “Are famines caused deliberately?: the politics and micro-politics influencing decisions”
Development Studies Association Conference, Dublin 1995.
MISCELLANEOUS Peter Bowbrick and Morwenna Griffiths (Eds), Boys' Schooldays in Ruddington Remembered,, Nottingham
Trent University, 2007.
Peter Bowbrick and Morwenna Griffiths (eds), Girls’ Schooldays in Ruddington Remembered Nottingham Trent