Searching for Basic Consumption Patterns Is the Engel Elasticity of Housing Unity?
AbstractWe estimate Engel elasticities of housing expenditures for each independent cross-section of the Consumer Expenditure Surveys in the period 1986-1998, and find that the elasticity remains close to unity for all years. Its mean over the period is 1.02. Engel and demographic effects for housing are estimated in an errors-in-variables two stage least square regression model using random samples of Norwegian households. We find that given demographic composition household demand for housing seems to increase proportionately with total consumption, in contrast to other categories such as food and transportation. The empirical regularity between housing expenditures and total consumption yields forecasting potential and may represent a basic pattern of consumption.
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Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 323.
Date of creation: Aug 2002
Date of revision:
Budget share; consumption pattern; demand for housing; Engel elasticity;
Find related papers by JEL classification:
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
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- Hansen, Julia L. & Formby, John P. & Smith, W. James, 1996. "The Income Elasticity of Demand for Housing: Evidence from Concentration Curves," Journal of Urban Economics, Elsevier, vol. 39(2), pages 173-192, March.
- Hansson Brusewitz, Urban, 1998. "Self-Selectivity and Kinked Budget Constraints: The Demand for Housing in Sweden," Journal of Housing Economics, Elsevier, vol. 7(3), pages 243-273, September.
- Jørgen Aasness & Erling Røed Larsen, 2002. "Distributional and Environmental Effects of Taxes on Transportation," Discussion Papers 321, Research Department of Statistics Norway.
- Hansen, Julia L. & Formby, John P. & Smith, W. James, 1998. "Estimating the Income Elasticity of Demand for Housing: A Comparison of Traditional and Lorenz-Concentration Curve Methodologies," Journal of Housing Economics, Elsevier, vol. 7(4), pages 328-342, December.
- Cheshire, Paul & Sheppard, Stephen, 1998. "Estimating the Demand for Housing, Land, and Neighbourhood Characteristics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(3), pages 357-82, August.
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