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Exploring the returns to scale in food preparation (baking penny buns at home)

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  • Thomas Crossley

    ()
    (Institute for Fiscal Studies and University of Cambridge)

  • Yuqian Lu

Abstract

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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Bibliographic Info

Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W05/03.

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Length: 28 pp.
Date of creation: Jan 2005
Date of revision:
Handle: RePEc:ifs:ifsewp:05/03

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Keywords: Household returns to scale; home production; food preparation;

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  1. Martin Browning & Pierre-Andre Chiappori, 2006. "Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power," Economics Series Working Papers 289, University of Oxford, Department of Economics.
  2. Deaton, A. & Paxson, C., 1997. "Economies of Scale, Household Size, and the Demand for Food," Papers 178, Princeton, Woodrow Wilson School - Development Studies.
  3. Apps, Patricia & Rees, Ray, 2001. "Household Saving and Full Consumption over the Life Cycle," IZA Discussion Papers 280, Institute for the Study of Labor (IZA).
  4. Mark Aguiar & Erik Hurst, 2004. "Consumption vs. Expenditure," NBER Working Papers 10307, National Bureau of Economic Research, Inc.
  5. Angus Deaton & Christina Paxson, 2003. "Engel's What? A Response to Gan and Vernon," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1378-1381, December.
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Cited by:
  1. Brencic, Vera & Young, Denise, 2009. "Time-Saving Innovations, Time Allocation, and Energy Use: Evidence from Canadian Households," Working Papers 2009-2, University of Alberta, Department of Economics.

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