The Social Value of Post Offices
Advisory Services
The Situation
Across the globe, universal service obligations state that users should have reasonable access to a full range of postal services. Post offices play a vital role in meeting this requirement, as well as fulfilling other social functions.
Nevertheless, post offices face serious threats: falling usage as a result of declining mail volumes, the availability of alternative mail providers, and the increasing use of cheaper alternatives for some of the non-postal services traditionally provided by post offices. This, together with general pressures on public expenditure, has led to significant contractions in the size of post office networks in many countries. It is natural, therefore, for policymakers to seek to better understand the value that post offices provide.
NERA's Role
NERA, leading a team including the market research company Accent, was commissioned by Postcomm to provide a quantitative analysis of customers' willingness to pay for the post office network in the UK. The study team developed and implemented a large stated preference survey of 1,200 households and small businesses, and used a conditional logit econometric choice model to estimate customers' willingness to pay. NERA provided an estimate of the value of the post office network as a whole and the individual services provided by post offices, and assessed how these values vary between different types of customer and between different areas.
NERA also provided an analysis of the profitability of associated businesses attached to post offices, and several case studies of possible competitors to, or alternative providers of, services that can be accessed through the post office network. In addition, the study provided an estimate of the costs and benefits to taxpayers of the Post Office network providing services compared with alternatives.
The Result
The study aimed to inform the UK government's and Postcomm's understanding of the social value associated with the post office network. The results were cited as part of the UK authorities’ case to the European Commission (to obtain state aid clearance) that post offices provide a genuine service of economic interest.
