IDEAS home Printed from https://ideas.repec.org/a/eee/deveco/v114y2015icp34-40.html
   My bibliography  Save this article

Hicksian separability does not hold over space: Implications for the design of household surveys and price questionnaires

Author

Listed:
  • Gibson, John
  • Kim, Bonggeun

Abstract

If relative prices of goods within a commodity group are constant, Hicksian separability lets the price of a single good represent the group price level. This is relied on by price questionnaires used with household surveys in developing countries and when constructing temporal and spatial deflators. Methods of estimating demand systems from household survey data also rely on Hicksian separability. Yet this restriction remains untested in cross-sections. We use unique data from Vietnam with multiple specifications from within the same food groups to test if within-group relative prices are constant over space. The data firmly reject these restrictions. Some guidelines for survey design are discussed, in terms of the characteristics of commodity groups that should be disaggregated and those that should have more elementary goods added to their linked price questionnaire.

Suggested Citation

  • Gibson, John & Kim, Bonggeun, 2015. "Hicksian separability does not hold over space: Implications for the design of household surveys and price questionnaires," Journal of Development Economics, Elsevier, vol. 114(C), pages 34-40.
    • Handle: RePEc:eee:deveco:v:114:y:2015:i:c:p:34-40
    DOI: 10.1016/j.jdeveco.2014.11.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S030438781400145X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jdeveco.2014.11.010?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Martin Browning & Thomas F. Crossley & Guglielmo Weber, 2003. "Asking consumption questions in general purpose surveys," Economic Journal, Royal Economic Society, vol. 113(491), pages 540-567, November.
    2. George C. Davis, 2003. "The Generalized Composite Commodity Theorem: Stronger Support in the Presence of Data Limitations," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 476-480, May.
    3. Lewbel, Arthur, 1996. "Aggregation without Separability: A Generalized Composite Commodity Theorem," American Economic Review, American Economic Association, vol. 86(3), pages 524-543, June.
    4. Beegle, Kathleen & De Weerdt, Joachim & Friedman, Jed & Gibson, John, 2012. "Methods of household consumption measurement through surveys: Experimental results from Tanzania," Journal of Development Economics, Elsevier, vol. 98(1), pages 3-18.
    5. Frank Asche & Helge Bremnes & Cathy R. Wessells, 1999. "Product Aggregation, Market Integration, and Relationships between Prices: An Application to World Salmon Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 568-581.
    6. Deaton, Angus, 1988. "Quality, Quantity, and Spatial Variation of Price," American Economic Review, American Economic Association, vol. 78(3), pages 418-430, June.
    7. Gould, John P & Segall, Joel, 1969. "The Substitution Effects of Transportation Costs," Journal of Political Economy, University of Chicago Press, vol. 77(1), pages 130-137, Jan./Feb..
    8. Cowen, Tyler & Tabarrok, Alexander, 1995. "Good Grapes and Bad Lobsters: Applying the Alchian and Allen Theorem," Economic Inquiry, Western Economic Association International, vol. 33(2), pages 253-256, April.
    9. McKelvey, Christopher, 2011. "Price, unit value, and quality demanded," Journal of Development Economics, Elsevier, vol. 95(2), pages 157-169, July.
    10. John Gibson & Scott Rozelle, 2005. "Prices and Unit Values in Poverty Measurement and Tax Reform Analysis," The World Bank Economic Review, World Bank, vol. 19(1), pages 69-97.
    11. Shumway, C. Richard & Davis, George C., 2001. "Does consistent aggregation really matter?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(2), pages 1-34.
    12. Minten, Bart & Kyle, Steven, 1999. "The effect of distance and road quality on food collection, marketing margins, and traders' wages: evidence from the former Zaire," Journal of Development Economics, Elsevier, vol. 60(2), pages 467-495, December.
    13. Blair, Edward & Burton, Scot, 1987. "Cognitive Processes Used by Survey Respondents to Answer Behavioral Frequency Questions," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 14(2), pages 280-288, September.
    14. Borcherding, Thomas E & Silberberg, Eugene, 1978. "Shipping the Good Apples Out: The Alchian and Allen Theorem Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 86(1), pages 131-138, February.
    15. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. John Gibson & Bonggeun Kim, 2017. "30 Years of Being Wrong: A Systematic Review and Critical Test of the Cox and Wohlgenant Approach to Quality-Adjusted Prices in Demand Analysis," Working Papers in Economics 17/16, University of Waikato.
    2. Gibson, John & Kim, Bonggeun, 2019. "Quality, quantity, and spatial variation of price: Back to the bog," Journal of Development Economics, Elsevier, vol. 137(C), pages 66-77.
    3. Madeira, Carlos, 2023. "The evolution of consumption inequality and risk-insurance in Chile," Emerging Markets Review, Elsevier, vol. 54(C).
    4. John Gibson, 2016. "Poverty Measurement: We Know Less than Policy Makers Realize," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 3(3), pages 430-442, September.
    5. John Gibson & Omoniyi Alimi, 2020. "Measuring poverty with noisy and corrected estimates of annual consumption: Evidence from Nigeria," African Development Review, African Development Bank, vol. 32(1), pages 96-107, March.
    6. John Gibson & Bonggeun Kim, 2018. "Economies of scale, bulk discounts, and liquidity constraints: comparing unit value and transaction level evidence in a poor country," Review of Economics of the Household, Springer, vol. 16(1), pages 21-39, March.
    7. Gibson, John & Le, Trinh, 2019. "Using local expert knowledge to measure prices: Evidence from a survey experiment in Vietnam," MPRA Paper 92533, University Library of Munich, Germany.
    8. John Gibson & Bonggeun Kim, 2019. "The price elasticity of quantity, and of quality, for tobacco products," Health Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 587-593, April.
    9. Chen,Xiaomeng & Mungai,Rose & Nakamura,Shohei & Pearson,Thomas Patrick & Wambile,Ayago Esmubancha & Yoshida,Nobuo, 2020. "How Useful is CPI Price Data for Spatial Price Adjustment in Poverty Measurement? : A Case from Ghana," Policy Research Working Paper Series 9388, The World Bank.
    10. John Gibson & Trinh Le, 2018. "Improved Modelling of Spatial Cost of Living Differences in Developing Countries: A Comparison of Expert Knowledge and Traditional Price Surveys," Working Papers in Economics 18/08, University of Waikato.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John Gibson & Bonggeun Kim, 2013. "Testing Hicksian Separability Over Space," Working Papers in Economics 13/07, University of Waikato.
    2. Mabel Andalon & John Gibson, 2017. "The 'Soda Tax' is Unlikely to Make Mexicans Lighter: New Evidence on Biases in Elasticities of Demand for Soda," Working Papers in Economics 17/07, University of Waikato.
    3. Andalón, Mabel & Gibson, John, 2018. "The ‘soda tax’ is unlikely to make Mexicans lighter or healthier: New evidence on biases in elasticities of demand for soda," MPRA Paper 86370, University Library of Munich, Germany.
    4. Li, Wenying & Zhen, Chen, 2017. "A Reassessment of Product Aggregation Bias in Demand Analysis: An Application to the U.S. Meat Market," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258197, Agricultural and Applied Economics Association.
    5. Qinghua Liu & C. Richard Shumway, 2004. "Testing aggregation consistency across geography and commodities," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(3), pages 463-486, September.
    6. John Gibson & Alessandro Romeo, 2017. "Fiscal-Food Policies are Likely Misinformed by Biased Price Elasticities from Household Surveys: Evidence from Melanesia," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 4(3), pages 405-416, September.
    7. Gibson, John & Kim, Bonggeun, 2013. "Quality, Quantity, and Nutritional Impacts of Rice Price Changes in Vietnam," World Development, Elsevier, vol. 43(C), pages 329-340.
    8. McKelvey, Christopher, 2011. "Price, unit value, and quality demanded," Journal of Development Economics, Elsevier, vol. 95(2), pages 157-169, July.
    9. Asche, Frank & Guttormsen, Atle G. & Kristofersson, Dadi & Roheim, Cathy A., 2005. "Import Demand Estimation and the Generalized Composite Commodity Theorem," 2005 Annual meeting, July 24-27, Providence, RI 19432, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Kira Lancker & Julia Bronnmann, 2022. "Substitution Preferences for Fish in Senegal," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(4), pages 1015-1045, August.
    11. Gibson, John & Le, Trinh, 2019. "Using local expert knowledge to measure prices: Evidence from a survey experiment in Vietnam," MPRA Paper 92533, University Library of Munich, Germany.
    12. Minagawa, Junichi & Upmann, Thorsten, 2013. "A note on parental time allocation," Labour Economics, Elsevier, vol. 25(C), pages 153-157.
    13. Abuelhaj, Tareq & Gassmann, Franziska & O'Donoghue, Cathal, 2018. "Price opinion data in subsidized economies: Empirical evidence from Iraq," MERIT Working Papers 2018-033, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    14. Lanie, Tomgouani, 2019. "Estimation des élasticités de demande des produits alimentaires au Togo," Économie rurale, French Society of Rural Economics (SFER Société Française d'Economie Rurale), vol. 369(July-Sept).
    15. John Gibson & Trinh Le, 2018. "Improved Modelling of Spatial Cost of Living Differences in Developing Countries: A Comparison of Expert Knowledge and Traditional Price Surveys," Working Papers in Economics 18/08, University of Waikato.
    16. Minagawa, Junichi, 2012. "On Giffen-like goods," Economics Letters, Elsevier, vol. 115(2), pages 282-285.
    17. Gilles Quentin Kane & Gwladys Laure Mabah Tene & Jean-Joël Ambagna & Isabelle Piot-Lepetit & Fondo Sikod, 2015. "The impact of food price volatility on consumer welfare in Cameroon," Working Papers hal-02801351, HAL.
    18. R. Morris Coats & Gary M. Pecquet & Leon Taylor, 2005. "The pricing of gasoline grades and the third law of demand," Microeconomics 0506006, University Library of Munich, Germany.
    19. Reed, Albert J. & Levedahl, J. William & Hallahan, Charles B., 2004. "The Generalized Composite Commodity Theorem And Food Demand Estimation," 2004 Annual meeting, August 1-4, Denver, CO 20107, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. von Cramon-Taubadel, Stephan & Loy, Jens-Peter & Meyer, Jochen, 2003. "The Impact Of Data Aggregation On The Measurement Of Vertical Price Transmission: Evidence From German Food Prices," 2003 Annual meeting, July 27-30, Montreal, Canada 21987, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:114:y:2015:i:c:p:34-40. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/devec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.