IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

On Demand Analysis and Dynamics: A Benefit Function Approach

  • Chavas, Jean-Paul

This paper develops an economic and econometric analysis of demand dynamics, with an application to US aggregate data over the period 1948-2010. The model builds on duality and the benefit function, which provide strong linkages with the theory. The research involves the specification and estimation of dynamic price-dependent demands as representations of marginal benefits. The analysis uncovers strong statistical evidence of demand dynamics, especially for food. We find that the marginal benefit of food declines with food consumption and that this effect becomes much stronger in the long run. We also find that, while food and service are always complements, the strength of this complementarity relationship increases sharply in the longer run.

If 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.

File URL:
Download Restriction: no

Paper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 149683.

in new window

Date of creation: 2013
Date of revision:
Handle: RePEc:ags:aaea13:149683
Contact details of provider: Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page:

More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Barten, A. P., 1969. "Maximum likelihood estimation of a complete system of demand equations," European Economic Review, Elsevier, vol. 1(1), pages 7-73.
  2. Jean-Paul Chavas & Michele Baggio, 2010. "On duality and the benefit function," Journal of Economics, Springer, vol. 99(2), pages 173-184, March.
  3. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762.
  4. Färe, Rolf & Grosskopf, Shawna & Hayes, Kathy J. & Margaritis, Dimitris, 2008. "Estimating demand with distance functions: Parameterization in the primal and dual," Journal of Econometrics, Elsevier, vol. 147(2), pages 266-274, December.
  5. Epstein, Larry G & Hynes, J Allan, 1983. "The Rate of Time Preference and Dynamic Economic Analysis," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 611-35, August.
  6. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
  7. repec:ebl:ecbull:v:4:y:2004:i:5:p:1-6 is not listed on IDEAS
  8. Michele Baggio & Jean-Paul Chavas, 2007. "On the Consumer Value of Complementarity: A Benefit Function Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(2), pages 489-502.
  9. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
  10. Keith R. McLaren & K. K. Gary Wong, 2008. "The Benefit Function Approach to Modeling Price-Dependent Demand Systems: An Application of Duality Theory," Monash Econometrics and Business Statistics Working Papers 8/08, Monash University, Department of Econometrics and Business Statistics.
  11. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  12. John Strauss & Duncan Thomas, 1998. "Health, Nutrition, and Economic Development," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 766-817, June.
  13. Barten, A. P. & Bettendorf, L. J., 1989. "Price formation of fish : An application of an inverse demand system," European Economic Review, Elsevier, vol. 33(8), pages 1509-1525, October.
  14. Grossman, Michael, 2000. "The human capital model," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 7, pages 347-408 Elsevier.
  15. Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
  16. Luenberger, David G, 1996. "Welfare from a Benefit Viewpoint," Economic Theory, Springer, vol. 7(3), pages 445-62, April.
  17. Jonathan Gruber & Botond Köszegi, 2001. "Is Addiction "Rational"? Theory And Evidence," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1261-1303, November.
  18. Becker, Gary S & Mulligan, Casey B, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 729-58, August.
  19. Nakamura, Alice & Nakamura, Masao, 1981. "On the Relationships among Several Specification Error Tests Presented by Durbin, Wu, and Hausman," Econometrica, Econometric Society, vol. 49(6), pages 1583-88, November.
  20. Godfrey, Leslie G, 1978. "Testing against General Autoregressive and Moving Average Error Models When the Regressors Include Lagged Dependent Variables," Econometrica, Econometric Society, vol. 46(6), pages 1293-1301, November.
  21. Luenberger, David G., 1992. "Benefit functions and duality," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 461-481.
  22. Bertrand Crettez & Naila Hayek & Jean-Michel Courtault, 2004. "On the differentiability of the benefit function," Economics Bulletin, AccessEcon, vol. 4(5), pages 1-6.
  23. Breusch, T S, 1978. "Testing for Autocorrelation in Dynamic Linear Models," Australian Economic Papers, Wiley Blackwell, vol. 17(31), pages 334-55, December.
  24. 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.
  25. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
  26. Pollak, Robert A, 1970. "Habit Formation and Dynamic Demand Functions," Journal of Political Economy, University of Chicago Press, vol. 78(4), pages 745-63, Part I Ju.
  27. Loewenstein, George & Prelec, Drazen, 1992. "Anomalies in Intertemporal Choice: Evidence and an Interpretation," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 573-97, May.
  28. Bleichrodt, Han & Gafni, Amiram, 1996. "Time preference, the discounted utility model and health," Journal of Health Economics, Elsevier, vol. 15(1), pages 49-66, February.
  29. Smith, Patricia K. & Bogin, Barry & Bishai, David, 2005. "Are time preference and body mass index associated?: Evidence from the National Longitudinal Survey of Youth," Economics & Human Biology, Elsevier, vol. 3(2), pages 259-270, July.
  30. David G. Luenberger, 1996. "Welfare from a benefit viewpoint (*)," Economic Theory, Springer, vol. 7(3), pages 445-462.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ags:aaea13:149683. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.