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American Journal of Audiology Vol.14 71-79 June 2005. doi:10.1044/1059-0889(2005/006)
© American Speech-Language-Hearing Association
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Effects of Economy and FDA Intervention on the Hearing Aid Industry

Amyn M. Amlani 1 and Dakshina G. De Silva 2

1 Texas Tech University Health Sciences Center, Lubbock
2 Texas Tech University, Lubbock

amyn.amlani{at}ttuhsc.edu

Purpose: The purpose of this study was to examine the effects of the economy and the Food and Drug Administration's (FDA) intervention on the hearing aid industry.

Method: A 3-stage least squares regression technique was used to analyze the hearing aid market.

Results: Our results show that, while recessionary periods reduced both demand and supply, the demand side of the hearing aid industry is significantly more responsive to changes in the economy. Further, the demand function within the hearing aid industry is inelastic. Finally, negative media coverage from nationally televised reports during the FDA's intervention between the 2nd quarter of 1993 and the 3rd quarter of 1994 did not significantly affect the market demand of hearing aids.

Conclusions: The demand for hearing aids increases in a flourishing economy and decreases during periods of recession. The negative media campaign from the FDA's intervention between the 2nd quarter of 1993 and the 3rd quarter of 1994 had essentially little effect on the end user. The repercussions of the FDA's intervention have resulted, however, in a reduction in the market supply of hearing aids and an increase in their cost due to manufacturer-sponsored clinical trials.

Key Words: Food and Drug Administration, economy, law of demand, law of supply, elasticity

Submitted on January 10, 2004
Revised on April 19, 2004
Accepted on February 14, 2005






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