The Economics of Global Consumption Patterns
Henri Theil devoted a good deal of the last two decades of his professional activities to the analysis of international consumption patterns. He had the bold idea of using a single system of demand equations to explain the variability of consumption patterns across widely diverse countries. In view of the tremendous variability of consumption across countries (as an example, the proportion of the budget devoted to food is above 50 percent in the poorest countries, while it is in the vicinity of 10 percent in the richest), this was an ambitious undertaking. To implement the idea, Theil used the ICP data to estimate a cross-country system of demand equations under the assumption that tastes were the same internationally. While this is quite acceptable at Chicago where tastes are an immutable constant, others could find the assumption more controversial. This paper commences with a review of Theil's path-breaking research on demand analysis, including cross-country applications, and then investigates in some detail two important issues. First, we analyse the extent to which differences in incomes and prices explain international consumption patterns; and, second, we provide new empirical evidence regarding the extent to which tastes are similar internationally. The paper also contains an evaluation of another important building block of Theil's work in this area, that of the assumption of preference independence, whereby there are no interactions between goods in the utility function.
|Date of creation:||2001|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (08) 9380 2918
Fax: (08) 9380 1016
Web page: http://www.business.uwa.edu.au/school/disciplines/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.:
- Seale, James L., Jr. & Regmi, Anita & Bernstein, Jason, 2003.
"International Evidence On Food Consumption Patterns,"
33580, United States Department of Agriculture, Economic Research Service.
- Seale, James & Regmi, Anita & Bernstein, Jason, 2003. "International Evidence on Food Consumption Patterns," Technical Bulletins 184321, United States Department of Agriculture, Economic Research Service.
- Clements, Kenneth W & Selvanathan, Antony & Selvanathan, Saroja, 1996.
"Applied Demand Analysis: A Survey,"
The Economic Record,
The Economic Society of Australia, vol. 72(216), pages 63-81, March.
- Laitinen, Kenneth, 1978. "Why is demand homogeneity so often rejected?," Economics Letters, Elsevier, vol. 1(3), pages 187-191.
- Chung, Ching-Fan & Lopez, Elena, 1988. "A regional analysis of food consumption in Spain," Economics Letters, Elsevier, vol. 26(3), pages 209-213.
- Barnett, William A, 1979. "Theoretical Foundations for the Rotterdam Model," Review of Economic Studies, Wiley Blackwell, vol. 46(1), pages 109-30, January.
- Bewley, Ronald, 2000. "Mr Henri Theil:: an interview with the International Journal of Forecasting," International Journal of Forecasting, Elsevier, vol. 16(1), pages 1-16.
- Selvanathan, E A, 1991. "Further Results on Aggregation of Differential Demand Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(4), pages 799-805, July.
- Mountain, Dean C, 1988. "The Rotterdam Model: An Approximation in Variable Space," Econometrica, Econometric Society, vol. 56(2), pages 477-84, March.
- Izan, Haji Y. & Clements, Kenneth W., 1979. "A cross-cross-section analysis of consumption patterns," Economics Letters, Elsevier, vol. 4(1), pages 83-86.
- Selvanathan, Saroja, 1987. "A Monte Carlo test of preference independence," Economics Letters, Elsevier, vol. 25(3), pages 259-261.
- Meisner, James F., 1979. "The sad fate of the asymptotic Slutsky symmetry test for large systems," Economics Letters, Elsevier, vol. 2(3), pages 231-233.
- Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
- K.W. Clements & D. Chen, 1994. "Fundamental Similarities in Consumer Behaviour," Economics Discussion / Working Papers 94-03, The University of Western Australia, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:uwa:wpaper:01-18. 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: (Verity Chia)
If references are entirely missing, you can add them using this form.