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Demographics and demand: Evaluation of alternative functional forms

  • Lyssiotou, Panayiota
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    We evaluate the role of functional form of demographics in demand analysis by proposing the GQL ‘unstructured’ demographically transformed model which nests the Barten–Gorman demographically modified model and popular rank-3 and rank-2 demand systems. We use UK individual data and find that the equivalence of the ‘unstructured’ and Barten–Gorman forms and identification of meaningful equivalence scales depend on the degree of flexibility of the demand system in demographic, price and income effects.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0165176512004363
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    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 117 (2012)
    Issue (Month): 3 ()
    Pages: 627-631

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    Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:627-631
    Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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    1. Lyssiotou, Panayiota & Pashardes, Panos & Stengos, Thanasis, 2002. "Nesting quadratic logarithmic demand systems," Economics Letters, Elsevier, vol. 76(3), pages 369-374, August.
    2. Ray, R., 1995. "Demographic Variables in Demand Systems: The Case for Generality," Papers 1995-08, Tasmania - Department of Economics.
    3. Daniel T. Slesnick, 1998. "Empirical Approaches to the Measurement of Welfare," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2108-2165, December.
    4. Richard Blundell & Xiaohong Chen & Dennis Kristensen, 2007. "Semi-Nonparametric IV Estimation of Shape-Invariant Engel Curves," Econometrica, Econometric Society, vol. 75(6), pages 1613-1669, November.
    5. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    6. Arthur Lewbel, 2007. "Shape Invariant Demand Functions," Boston College Working Papers in Economics 669, Boston College Department of Economics, revised 26 Nov 2008.
    7. Arthur Lewbel, 2000. "A Rational Rank Four Demand System," Boston College Working Papers in Economics 463, Boston College Department of Economics, revised 04 Apr 2003.
    8. Gozalo, Pedro L., 1997. "Nonparametric bootstrap analysis with applications to demographic effects in demand functions," Journal of Econometrics, Elsevier, vol. 81(2), pages 357-393, December.
    9. Lyssiotou, Panayiota & Pashardes, Panos & Stengos, Thanasis, 1999. "Testing the rank of Engel curves with endogenous expenditure," Economics Letters, Elsevier, vol. 64(1), pages 61-65, July.
    10. Barnes, Roberta & Gillingham, Robert, 1984. "Demographic Effects in Demand Analysis: Estimation of the Quadratic Expenditure System Using Microdata," The Review of Economics and Statistics, MIT Press, vol. 66(4), pages 591-601, November.
    11. Lewbel, Arthur, 1985. "A Unified Approach to Incorporating Demographic or Other Effects into Demand Systems," Review of Economic Studies, Wiley Blackwell, vol. 52(1), pages 1-18, January.
    12. Lewbel, Arthur, 1989. "Household equivalence scales and welfare comparisons," Journal of Public Economics, Elsevier, vol. 39(3), pages 377-391, August.
    13. Panayiota Lyssiotou, 2003. "On estimating the cost of characteristics indices from consumer demand analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 36(2), pages 326-349, May.
    14. Yiguo Sun & Thanasis Stengos & Dianqin Wang, 2006. "Estimates of semiparametric equivalence scales," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(5), pages 629-639.
    15. Nelson, Julie A, 1988. "Household Economies of Scale in Consumption: Theory and Evidence," Econometrica, Econometric Society, vol. 56(6), pages 1301-14, November.
    16. Lewbel, Arthur, 1990. "Full Rank Demand Systems," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(2), pages 289-300, May.
    17. Christopher J. Nicol, 2001. "The rank and model specification of demand systems: an empirical analysis using United States microdata," Canadian Journal of Economics, Canadian Economics Association, vol. 34(1), pages 259-289, February.
    18. David L. Ryan & Terence J. Wales, 1999. "Flexible And Semiflexible Consumer Demands With Quadratic Engel Curves," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 277-287, May.
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