An Analysis of Household Responses to Price Shocks in Vietnam: Can Unit Values Substitute for Market Prices?
This paper examines the robustness of Deaton’s widely used method for estimating consumer responses. While unit values, ratios of expenditures to quantities purchased, are often employed in demand analysis as proxies for missing market prices, Deaton argues bias is likely to result as a consequence of both quality effects and measurement error. Hence he proposes a procedure that corrects the bias and enables price elasticities to be obtained in the absence of explicit price information. Given the availability of market price data and unit values in Vietnam, this paper estimates a food demand system and investigates the usefulness of Deaton’s method. It also takes the analysis a step further to the existing literature by computing the welfare impact of price changes to see how Deaton’s method performs in this context. The results demonstrate that Deaton’s method generates materially different price elasticities from those estimated with market prices. However, it produces relatively similar results for the welfare analysis. Deaton’s procedure therefore appears to be valid in welfare analysis at least in the case of Vietnam, but the findings also indicate that its use by policymakers should carry a strong health warning.
|Date of creation:||May 2005|
|Date of revision:|
|Contact details of provider:|| Postal: Jubilee Building G08, Falmer, Brighton, BN1 9SL|
Phone: +44 (0) 1273 678889
Fax: +44 (0)1273 873715
Web page: http://www.sussex.ac.uk/economics
More information through EDIRC
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.:
- C. Peter Timmer & Harold Alderman, 1979. "Estimating Consumption Parameters for Food Policy Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(5), pages 982-987.
- Nicita, Alessandro, 2004. "Efficiency and equity of a marginal tax reform - income, quality, and price elasticities for Mexico," Policy Research Working Paper Series 3266, The World Bank.
- Nelson, Julie A, 1990. "Quantity Aggregation in Consumer Demand Analysis When Physical Quantities Are Observed," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 153-56, February.
- Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
- Stavrev, Emil & Kambourov, Gueorgui, 1999. "Estimation of Income, Own- and Cross-Price Elasticities. An Application for Bulgaria," Transition Economics Series 6, Institute for Advanced Studies.
- Deaton, A., 1990.
"Price Elasticities From Surveys Data: Extensions And Indonesian Results,"
69, World Bank - Living Standards Measurement.
- Deaton, Angus, 1990. "Price elasticities from survey data : Extensions and Indonesian results," Journal of Econometrics, Elsevier, vol. 44(3), pages 281-309, June.
- Deaton, A., 1988. "Price Elasticities From Survey Data: Extensions And Indonesian Results," Papers 138, Princeton, Woodrow Wilson School - Development Studies.
- L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
- Pitt, Mark M, 1983. "Food Preferences and Nutrition in Rural Bangladesh," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 105-14, February.
- Minot, Nicholas & Goletti, Francesco, 2000. "Rice market liberalization and poverty in Viet Nam:," Research reports 114, International Food Policy Research Institute (IFPRI).
- Leif Brubakk, 1997. "Estimation of Price Elasticities from Norwegian Household Survey Data," Discussion Papers 202, Statistics Norway, Research Department.
- Dwayne Benjamin & Loren Brandt, 2002.
"Agriculture and Income Distribution in Rural Vietnam under Economic Reforms: A Tale of Two Regions,"
benjamin-02-01, University of Toronto, Department of Economics.
- Loren Brandt & Dwayne Benjamin, 2002. "Agriculture and Income Distribution in Rural Vietnam under Economic Reforms: A Tale of Two Regions," William Davidson Institute Working Papers Series 519, William Davidson Institute at the University of Michigan.
- Niimi, Yoko & Vasudeva Dutta, Puja, 2007.
"Trade Liberalisation and Poverty Dynamics in Vietnam,"
Journal of Economic Integration,
Center for Economic Integration, Sejong University, vol. 22, pages 819-851.
- Yoko Niimi & Puja Vasudeva Dutta & Alan Winters, 2003. "Trade Liberalisation and Poverty Dynamics in Vietnam," PRUS Working Papers 17, Poverty Research Unit at Sussex, University of Sussex.
- repec:pid:journl:v:27:y:1988:i:2:p:89-107 is not listed on IDEAS
- L. Alan Winters, 2002. "Trade Liberalisation and Poverty: What are the Links?," The World Economy, Wiley Blackwell, vol. 25(9), pages 1339-1367, 09.
- L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 72-115, March.
- Nicita, Alessandro, 2004. "Who benefited from trade liberalization in Mexico? Measuring the effects on household welfare," Policy Research Working Paper Series 3265, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:pru:wpaper:30. 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: (Russell Eke)
If references are entirely missing, you can add them using this form.