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Household Semi-public Goods and the Estimation of Consumer Equivalence Scales: Some First Steps

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  • Bruce Bradbury

Abstract

Models of household consumption used to estimate the relative needs of people living in different family types need to take account of economies of household size, price-like substitution effects and the allocation of consumption among the individuals of the household. No existing estimation method tackles all three of these issues in a simultaneous and transparent fashion. Partly because of this, consumption-based estimates of consumer equivalence scales have had little direct application in social and economic policies. This paper combines a household production model introduced by Lau (1985) with a Samuelson-type (1956) household welfare function to develop a consumption model which is both general and amenable to the incorporation (and testing) of a range of additional identifying information. The latter can include ‘expert judgements’ of the technology of household production (the scale economies) of different goods. A simplified version of this model is used to estimate some preliminary equivalence scales and intra-household allocations for aged couples and singles.

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Bibliographic Info

Paper provided by University of New South Wales, Social Policy Research Centre in its series Discussion Papers with number 0059.

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Length: 52 pages
Date of creation: May 1995
Date of revision:
Handle: RePEc:wop:sprcdp:0059

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References

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  1. Bradbury, Bruce, 1994. "Measuring the Cost of Children," Australian Economic Papers, Wiley Blackwell, vol. 33(62), pages 120-38, June.
  2. Keller, Wouter J., 1984. "Some simple but flexible differential consumer demand systems," Economics Letters, Elsevier, vol. 16(1-2), pages 77-82.
  3. Maureen T. Rimmer & Alan A. Powell, 1992. "An Implicitly Directly Additive Demand System: Estimates for Australia," Centre of Policy Studies/IMPACT Centre Working Papers op-73, Victoria University, Centre of Policy Studies/IMPACT Centre.
  4. Nelson, Julie A, 1988. "Household Economies of Scale in Consumption: Theory and Evidence," Econometrica, Econometric Society, vol. 56(6), pages 1301-14, November.
  5. Deaton, Angus S & Muellbauer, John, 1986. "On Measuring Child Costs: With Applications to Poor Countries," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 720-44, August.
  6. Pollak, Robert A & Wales, Terence J, 1981. "Demographic Variables in Demand Analysis," Econometrica, Econometric Society, vol. 49(6), pages 1533-51, November.
  7. Nelson, Julie A, 1993. "Household Equivalence Scales: Theory versus Policy?," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 471-93, July.
  8. Muellbauer, John, 1977. "Testing the Barten Model of Household Composition Effects and the Cost of Children," Economic Journal, Royal Economic Society, vol. 87(347), pages 460-87, September.
  9. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  10. Nelson, Julie A, 1992. "Methods of Estimating Household Equivalence Scales: An Empirical Investigation," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 38(3), pages 295-310, September.
  11. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  12. Fortin, B. & Lacroix, G., 1993. "A Test of the Neoclassical and Collective Models of Household Labour Supply," Papers 9335, Laval - Recherche en Politique Economique.
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Cited by:
  1. Koulovatianos, Christos & Schroder, Carsten & Schmidt, Ulrich, 2005. "On the income dependence of equivalence scales," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 967-996, June.
  2. Bruce Bradbury, 1996. "Household Income Sharing, Joint Consumption and the Expenditure Patterns of Australian Retired Couples and Single People," Discussion Papers 0066, University of New South Wales, Social Policy Research Centre.

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