We show that as household size increases, households substitute away from prepared foods and towards ingredients. They also devote more time to food preparation. These observations (1) are consistent with a simple model with home production, returns to scale in the time input to food preparation, and varieties of food that differ in the required time input; (2) support the idea that returns to scale in home production are an important source of returns to scale in consumption; and (3), mean that across household sizes, household market expenditures on food are not proportional to food consumption quantities. The latter may provide a partial explanation for a puzzle raised by Deaton and Paxson.
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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number
W05/03.
Length: 28 pp. Date of creation: Jan 2005 Date of revision: Handle: RePEc:ifs:ifsewp:05/03
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