The Economics of Global Consumption Patterns
AbstractHenri Theil devoted a good deal of the last two decades of his professional activities to the analysis of international consumption patterns. He had the bold idea of using a single system of demand equations to explain the variability of consumption patterns across widely diverse countries. In view of the tremendous variability of consumption across countries (as an example, the proportion of the budget devoted to food is above 50 percent in the poorest countries, while it is in the vicinity of 10 percent in the richest), this was an ambitious undertaking. To implement the idea, Theil used the ICP data to estimate a cross-country system of demand equations under the assumption that tastes were the same internationally. While this is quite acceptable at Chicago where tastes are an immutable constant, others could find the assumption more controversial. This paper commences with a review of Theil's path-breaking research on demand analysis, including cross-country applications, and then investigates in some detail two important issues. First, we analyse the extent to which differences in incomes and prices explain international consumption patterns; and, second, we provide new empirical evidence regarding the extent to which tastes are similar internationally. The paper also contains an evaluation of another important building block of Theil's work in this area, that of the assumption of preference independence, whereby there are no interactions between goods in the utility function.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The University of Western Australia, Department of Economics in its series Economics Discussion / Working Papers with number 01-18.
Length: 37 pages
Date of creation: 2001
Date of revision:
Contact details of provider:
Postal: 35 Stirling Highway, Crawley, W.A. 6009
Phone: (08) 9380 2918
Fax: (08) 9380 1016
Web page: http://www.business.uwa.edu.au/school/disciplines/economics
More information through EDIRC
Other versions of this item:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Seale, James L., Jr. & Regmi, Anita & Bernstein, Jason, 2003. "International Evidence On Food Consumption Patterns," Technical Bulletins 33580, United States Department of Agriculture, Economic Research Service.
- Selvanathan, Saroja, 1987. "A Monte Carlo test of preference independence," Economics Letters, Elsevier, vol. 25(3), pages 259-261.
- Barnett, William A, 1979. "Theoretical Foundations for the Rotterdam Model," Review of Economic Studies, Wiley Blackwell, vol. 46(1), pages 109-30, January.
- Selvanathan, E A, 1991. "Further Results on Aggregation of Differential Demand Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(4), pages 799-805, July.
- Laitinen, Kenneth, 1978. "Why is demand homogeneity so often rejected?," Economics Letters, Elsevier, vol. 1(3), pages 187-191.
- Mountain, Dean C, 1988. "The Rotterdam Model: An Approximation in Variable Space," Econometrica, Econometric Society, vol. 56(2), pages 477-84, March.
- Bewley, Ronald, 2000. "Mr Henri Theil:: an interview with the International Journal of Forecasting," International Journal of Forecasting, Elsevier, vol. 16(1), pages 1-16.
- Chung, Ching-Fan & Lopez, Elena, 1988. "A regional analysis of food consumption in Spain," Economics Letters, Elsevier, vol. 26(3), pages 209-213.
- Clements, Kenneth W & Selvanathan, Antony & Selvanathan, Saroja, 1996. "Applied Demand Analysis: A Survey," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 63-81, March.
- Meisner, James F., 1979. "The sad fate of the asymptotic Slutsky symmetry test for large systems," Economics Letters, Elsevier, vol. 2(3), pages 231-233.
- Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
- Izan, Haji Y. & Clements, Kenneth W., 1979. "A cross-cross-section analysis of consumption patterns," Economics Letters, Elsevier, vol. 4(1), pages 83-86.
- Qi, Li & Prime, Penelope B., 2009. "Market reforms and consumption puzzles in China," China Economic Review, Elsevier, vol. 20(3), pages 388-401, September.
- Bohman, Helena & Nilsson, Désirée, 2006. "Income Inequality as a Determinant of Trade Flows," Working Paper Series in Economics and Institutions of Innovation 73, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shane Standley).
If references are entirely missing, you can add them using this form.