There’s a tremendously interesting publication from the University of Dundee by researcher Ruth Bickerton and Dr. Carlo Morelli which we’ve been reading over the last few days. It came out earlier this year, and is called Funeral Poverty in Dundee – Funeral Link Evaluation. It’s about Funeral Link, a charity set up to address the problem of funeral poverty in Dundee.
The report is a comprehensive evaluation of the project in its initial phase of existence, which makes fascinating reading. It is a thorough analysis of the need for such an independent, informed advocacy service with a specific goal of helping people who are struggling with funeral costs. Other local authorities might like to make this required reading for their decision makers.
In analysis of the impact of Funeral Link, one of the stakeholders quoted the need for this funeral advice as being ‘essential’. They went on to say ‘There’s a stigma about saying you don’t have the money for a funeral. With Funeral Link you can go anonymously for advice and sign-posting, and get an idea of what your options are, and what they might cost.’
Along with analysing the effects of the existence of Funeral Link, the report also offers an analysis of the process and the current funeral market.
It’s worth a read even if you’re not responsible for the purse strings of a local authority budget. Some extracts below:
2.3i Need Recognition
“One level of uncertainty comes in the form of information asymmetry between the next of kin and the funeral director. This takes a number of forms: first the consumer is making decisions at a time of significant stress and cognitive dissonance. Grief and emotional distress limit the ability to process and evaluate information. Next of kin are thus uncertain as to the exact nature of the funeral director’s role and the funeral director’s role itself can be multi-faceted and ambiguous in three distinct areas.
First, in ensuring statutory requirements are followed by the next of kin, involving complying with the legal requirement that is to dispose of a deceased’s remains. Second, they also have a sales role. A funeral director is a direct service provider, involving the provision of services on behalf of the next of kin in the maintenance, care and movement of the deceased. In this sales role they additionally act as an intermediary sales organisation supplying services of third party providers such as booking slots at crematoria or burial grounds, ordering flowers, organising post-funeral receptions or placing notices in newspapers. A funeral director’s third and final act is to provide counselling, advisory and even advocacy activities. Funeral directors provide counselling and comfort, listening to the next of kin and guiding them in decision making, through a one-to-one meeting to make the arrangements. Funeral directors also provide advisory information and signposting to next of kin for their bereavement journey and, finally, they provide advocacy functions with regulatory bodies such as the NHS, police or the Department for Work and Pensions, via the completion of formal applications for means-tested Social Fund Funeral Expenses Payments SF200.
The ambiguity within the funeral director/next of kin relationship facilitates both the development of information asymmetry in the contracting between parties but also the prospect of moral hazard in the potential abuse of the power relationship arising from these information asymmetries. Moral hazard can be understood as consumers making decisions detrimental to their wellbeing due to an inability to distinguish between the elements of the funeral director’s counselling, advisory and advocacy functions. There is the potential for what economists regard as opportunism in the contracting and price setting environment, as consumers’ preferences are revealed in advance to funeral directors revealing their price elasticities, allowing for the potential emergence of price discrimination and individualised pricing.”
2.4 The Funeral Market
“The funeral market has distinct and related properties which distinguish it from other markets for services and explain why it is difficult for the market to operate as other markets would be expected to operate. The fixed nature of demand and the oligopolistic nature of competition together increase the potential for market failure leading to consumers paying higher costs than might otherwise occur.
In most consumer markets a reduction in price would be expected to increase the consumption of the service. This is not the case for funerals. Demand for funeral services is what economists would understand as inelastic and changes in price therefore do not impact on the quantity demanded within a market. The consequence for the supply of funerals and competition is thus that, for entry of new producers into the market to occur (or alternatively for existing firms to cut prices) the only change would be for existing demand to be redistributed among the producers of funeral services. Market competition in this environment is what many would understand to be a zero sum game.
Attempts to influence the timing of purchases for funeral services occurs through pre-payment and funeral plans, in order to bring forward income to firms, but this cannot alter the absolute market size for funerals. Market size is influenced, and predictable, by the demographics and life expectancy of the population as a whole and therefore of a relatively fixed size with the consequence that entry into the market by new producers has historically been discouraged.”
“The funeral director’s role has remained relatively static for many years. Whilst the funeral directors’ origins can be found in the associated activities of carpenters and woodworking companies or garage owners, many of today’s funeral directors are specialist organisations with greater or lesser degrees of investment in specific assets. While buildings can be changed in function, the backroom facilities in cold rooms and refrigeration, funeral limousines and hearses are not easily adapted for alternative uses. Thus the industry itself has been relatively static for many years with little innovation. From the established funeral directors’ perspective, while the dominant duopolistic firms of Dignity and the Co-Op set high prices, smaller firms can adjust their prices at a small discount to those set by these two firms. Smaller firms’ concerns lie not with the actions of the larger dominant firms but with the potential for entry by smaller, and less well-equipped firms. Thus, the low-cost unregulated sector provides a threat to the continued success of established firms and therefore the dominant view presented by the smaller chains and independent firms was to favour regulation conditionally on the basis that the levels were neither set too high nor that the regulatory minima were applied selectively and low cost entrants could avoid regulation.”
There’s lots more, but we felt that the thorough understanding of the funeral process and sector outlined in the report was worth highlighting.
Conclusion? We need more Funeral Links. Lots of them. Advocates for bereaved people acting as intermediaries and advisors would make a massive difference to people around the UK struggling to afford a funeral.
Well done Linda and team, and the board of Funeral Link trustees overseeing this venture.