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Economies of Scale in the Household: Puzzles and Patterns from the American Past

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  • Trevon D. Logan

Abstract

Household economies of scale arise when households with multiple members share public goods, making larger households better off at lower per capita expenditures. While estimates of household economies of scale are critical for measuring income and living standards, we do not know how these scale economies change over time. I use American household expenditure surveys to produce the first comparable historical estimates of household scale economies. I find that scale economies changed significantly from 1888 to 1935 for all expenditure categories considered (food, clothing, entertainment, and housing), but not all trends in scale economies are consistent with theoretical predictions. I use these historical estimates of household scale economies to resolve several theoretical and empirical puzzles in the literature. I find that existing explanations for puzzles in the household economies of scale literature do not hold in the past. As such, our notions about household economies of scale must be reassessed in light of this historical evidence.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13869.

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Date of creation: Mar 2008
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Publication status: published as Trevon D. Logan, 2011. "Economies Of Scale In The Household: Puzzles And Patterns From The American Past," Economic Inquiry, Western Economic Association International, vol. 49(4), pages 1008-1028, October.
Handle: RePEc:nbr:nberwo:13869

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Cited by:
  1. Jacobson, David & Mavrikiou, Petroula M. & Minas, Christos, 2010. "Household size, income and expenditure on food: The case of Cyprus," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 39(2), pages 319-328, April.
  2. Tscharaktschiew, Stefan & Hirte, Georg, 2009. "How does the household structure shape the urban economy?," Dresden Discussion Paper Series in Economics 07/09, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  3. Timothy Halliday, 2007. "Mismeasured Household Size and Its Implications for the Identification of Economies of Scale," Working Papers, University of Hawaii at Manoa, Department of Economics 200709, University of Hawaii at Manoa, Department of Economics.
  4. Michele Tertilt, 2009. "Families as Roommates: Changes in U.S. Household Size from 1850 to 2000," Discussion Papers, Stanford Institute for Economic Policy Research 09-001, Stanford Institute for Economic Policy Research.
  5. Trevon D. Logan, 2008. "Are Engel Curve Estimates of CPI Bias Biased?," NBER Working Papers 13870, National Bureau of Economic Research, Inc.
  6. Sanae Tashiro, 2009. "Differences in Food Preparation by Race and Ethnicity: Evidence from the American Time Use Survey," The Review of Black Political Economy, Springer, Springer, vol. 36(3), pages 161-180, December.
  7. Akresh, Richard & Edmonds, Eric V., 2010. "The Analytical Returns to Measuring a Detailed Household Roster," IZA Discussion Papers 4759, Institute for the Study of Labor (IZA).

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