Equivalence scales for children.

Household economies of scale (arising from the existence of househo ld public goods, increasing returns in household production, and/or bulk discounts) are incorporated into a utility-theoretic model of household demands. Individuals are assumed to be identical and symmetrically treated within households. Economies of scale parameters for five goods are estimated using the quadratic expenditu re system and data from the U.S. Consumer Expenditure Survey on expenditures by all-adult households. Results suggest the existence o f significant economies of scale in the consumption of all of the included goods, with economies being especially pronounced in the consumption of shelter. Copyright 1988 by The Econometric Society.

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Household Economies of Scale in Consumption: Theory and Evidence

Given a preference basis for the model, a household's general equivalence scale is seen to be a cost of living index relative to the reference household type defined at constant prices. A maximum likelihood estimation procedure which can be applied both to cross-section data and pooled time-series/cross-sections is derived. The lack of identification of the model is established theoretically and checked empirically on British family expenditure survey data. With prior information, e.g. a nutrition based food scale, identification can be reached but ultimately the model is rendered implausible because of its zero substitution implication and the empirical results bear this out.

The estimation of the prais-houthakker model of equivalence scales

Russia's transition to a market economy has been accompanied by a sharp rise in the incidence and severity of poverty. This book provides a systematic analysis of poverty and living standards in Russia based on nationally representative household survey data. The primary goal is to quantify the nature and extent of changes in the welfare of ordinary Russians during the course of the transition. Part I in this book comprises a series of chapters that analyze the profile and trends of poverty and cover both monetary and nonmonetary indicators. Following the introductory chapter, chapter 2 traces current development and provides an important historical perspective to current trends. The author of chapter 3 undertakes detailed econometric analysis to identify the risk factors associated with poverty. Chapter 4 investigates the worsening health situation that has paralleled the deterioration of living conditions during the difficult socioeconomic transition. The author of chapter 5 presents a Russian perspective of trends in poverty during the transition. Chapter 6 explores the labor market, regional differences in particular. Chapter 7 undertakes detailed analysis of the unemployed. Part II addresses selected critical aspects of the system of social support (chapter 8), the extent of private interhousehold transfers (chapter 9), and public opinion about social problems (chapter 10).

Poverty in Russia : public policy and private responses

Publisher Summary “Demand analysis” refers largely to the study of commodity demands by consumers, most usually based on aggregate data but occasionally, and more so recently, on cross-sections or even panels of households. This chapter discusses the links between conventional demand analysis and such topics as labor supply, the consumption function, rationing, index numbers, equivalence scales, and consumer surplus. The econometric analysis of demand under conditions of rationing or quantity constraints is discussed in the chapter. The chapter discusses intertemporal demand analysis, including the analysis of the consumption function and of durable goods, the choice over qualities, and the links between demand analysis and welfare economics—particularly as it concerns the measurement of consumer surplus, cost-of-living index numbers, and the costs of children

Chapter 30 Demand analysis

CROSS-SECTION STUDIES on consumer behavior tacitly assume that any two households with equal per capita/per unit2 income within a homogeneous group would display similar consumption pattern. One may, however, see in practice that large households are, generally, able to enjoy higher standard of living as compared to small ones, even though both may have identical per capita/per unit incomes. Therefore, a simple and straightforward Engel curve analysis relating per capita/per unit expenditure on any specific item of consumption with per capita/per unit income may not always yield satisfactory results. This clearly necessitates a modification in the formulation of the Engel function so that it becomes possible to account for this kind of a priori information in the Engel curve analysis. Consumer behavior of large households may be more economical in respect to specific items as well as all items of consumption taken together. Therefore, attempting to incorporate such possibilities in the Engel curve analysis, Prais and Houthakker [4] introduced the concepts of 'specific' and 'income' economies of scale in household consumption. According to 'specific' economies/diseconomnies of scale, equiproportionate change in income and household size (leaving per capita/per unit income unaltered) results in less/more than proportionate change in per capita/per unit expenditure on any specific item. It is common knowledge that not all items of the household budget will reveal economies of scale in their consumption. There may as well be diseconomies of scale in the consumption of some items of the budget, which may offset, at least partly, the effects of economies of scale in the consumption of other items. In consequence, there would'be an 'overall effect' of such economies and diseconomies of scale on household consumption. This may be termed as 'income' economies/diseconomies of scale according as the degree of specific economies is greater/smaller than specific diseconomies of scale. Accordingly, a household is said to be enjoying income economies/diseconomies of scale, if it is able to enjoy higher/lower standard of living than a relatively smaller household, with the same level of per capita/per unit income. The basic problem involved in this analysis is the determination of 'specific'

Balvir Singh

Papers

On the determination of economies of scale in household consumption