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Estimating the cost of children through Engel curves by different good aggregates

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  • Achille VERNIZZI

  • Elena SILETTI

Abstract

Equivalence scales for the cost of children are estimated for one of the most developed Italian region (Lombardia) through the Engel approach. The data set is obtained from the survey on household consumption expenditures, which is hold by the Italian Central Institute for Statistics (ISTAT) in 1997, 1998, 1999 and 2000. The estimation of equivalence scales is not restricted to the share devoted to food. Besides the usual share of food and non-alcoholic beverages, we specify four further shares of necessities. Moreover the Box-Cox transformation for the dependent variable is adopted. The results, obtained in this research, show that, in estimating equivalence scales through Engel curves, it is very important to specify control variables that can take account for heterogeneity among families. Though the food share can still be a valid indicator to compare family welfare and then to estimate equivalence scales, in some situations it results to be misleading. The experiment of adopting broader good aggregates as indicators gives interesting results and more likely estimates in correspondence of some family typologies.

Suggested Citation

  • Achille VERNIZZI & Elena SILETTI, 2004. "Estimating the cost of children through Engel curves by different good aggregates," Departmental Working Papers 2004-34, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2004-34
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    File URL: http://wp.demm.unimi.it/files/wp/2004/DEMM-2004_034wp.pdf
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    1. repec:ebl:ecbull:v:4:y:2002:i:9:p:1-7 is not listed on IDEAS
    2. Federico Perali, 2002. "Some curiosites about the Engel method to estimate equivalence scales," Economics Bulletin, AccessEcon, vol. 4(9), pages 1-7.
    3. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, November.
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    Cited by:

    1. Stefania Maria Lorenza Rimoldi & Elisa Barbiano di Belgiojoso, 2014. "Detecting the poor among foreigners: remarks on a convenient equivalence scale," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - The Italian Journal of Economic, Demographic and Statistical Studies, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 68(3-4), pages 7-14, July-Dece.

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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